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November 30, 2007
New copyright case
Yesterday, the Second Circuit Appeals Court may have thrown a large monkey wrench into the copyright system. In a case involving a settlement between freelance writers and publishers, the Court ruled that Federal district courts (such as the one that approved the settlement) have no jurisdiction over cases involving unregistered copyrights. In other words, unless the work is registered with the U.S. Copyright Office, you can not sue in Federal court.
Say what? Even though a past change in the law says that copyright is created when the work "becomes tangible", it can't be enforced until registered?
I don't know if this is a glitch, a technicality or a major legal precedent. It is clear that everyone is now totally confused. As the New York Times story states, "People on both sides of the dispute said it was unclear what would happen next — whether the decision would be appealed, a new suit filed, or a new agreement negotiated."
I suspect that this will go all the way to the Supreme Court. There is likely to legislation as well. In the meantime, the Copyright Office may be flooded with new registrations.
All of this could be a minor correct to the law. Or it could be an opening for some of the newer ideas on copyright, such as Lawrence Lessig's idea for sliding scale fee for different time lengthens of copyright protection (see Protecting Mickey Mouse at Art's Expense).
This could get interesting.
A copy of the decision is online. Other information is available from the Copyright Settlement website.
Posted by Ken Jarboe at 08:55 AM | Comments (0) | TrackBack
November 29, 2007
The Scots get it
Scotland has set up an Intellectual Assets Centre to help Scottish companies manage and utilize their intellectual assets (IA):
The IA Centre is a first, in Scotland and indeed in Europe - a unique centre to assist businesses in deriving value from their IA. Supported by the Scottish Executive, the Centre was developed in response to the demand from businesses to learn more about their IA. Initial studies showed that, despite the number of businesses asking for advice, there were still many more that were not aware. Moreover, the value of unexploited IA lying in Scottish companies were judged to be several billion pounds!
The Centre aims to provide support and advice to mainly small and medium size enterprises. But the website is open to anyone and offers an array of tools and resources on intellectual asset management, including IA audit tools and case studies. Worth checking out.
Posted by Ken Jarboe at 10:38 AM | Comments (0) | TrackBack
November 28, 2007
Risk management and intangibles
Steven Pearlstein's column in the Washington Post this morning is a good illustration of the limitations of the quantitative approach - in this case, The Art of Managing Risk. Pearlstein talks with risk management expert Vince Kaminski:
As Kaminski sees it, the first problem is that the models these systems are based on, while potentially useful, have serious limitations that are too often ignored.
The data that go into them, he says, are so aggregated and "averaged" that they disregard outliers and abnormalities that turn out to be important. There are also risks -- like risk to reputation -- that are ignored because there is no data set by which to quantify them.
Moreover, by relying heavily on past patterns of behavior, they are often useless in dealing with the new products and new markets that are most often the source of the trouble.
Most importantly, Kaminski says, the models have been unable to capture the cascading effect as problems spread, confidence is undermined and people start to act irrationally.
. . .
"What matters in terms of managing risk," Kaminski says, "isn't the model -- it's the intuition, judgment and experience to spot the risks as they are developing, and the character to be able to stand up to very aggressive and successful commercial people and say, 'Enough is enough.' "
In other words, the key is tacit knowledge and understanding the intangibles, like reputation risk and human behavior.
The same can be said of other "quant" approaches. Years ago, I was in a lecture by a forecasting expert who was comparing large econometric models with "expert" opinion. He said that over iterations of revising a forecast, the models and the experts tend to converge. One person asked, "is that because the experts modify their judgments in light of the results of the models?" "No," he replies, "it is just as likely that the modelers tweak the model based on the experts judgments."
Metrics are important -- but the numbers don't always capture everything. As we improve our measurements of intangible, let us always remember that part of our quest for information will lie outside the realm of the quantifiable.
Posted by Ken Jarboe at 08:50 AM | Comments (1) | TrackBack
November 27, 2007
Innovation and the Presidential candidates
Last week, I mentioned the latest issue of Business Week's Inside Innovation. That issue is running a piece on Proposed Presidential Innovation:
BusinessWeek questioned the leading candidates in the Republican and Democratic parties about their views on innovation. First we asked for their definition of the word. Innovation is not simply invention. It involves creating value, both in business and in civic society. Their responses varied from broad visions to specific policy proposals.
Then we asked for their plans to stimulate innovation in four major areas—science and engineering education, green energy, the military, research and development—as well as how they would develop better ways to measure innovation.
Of course, they are not the only ones looking at the candidates positions on these issues. Over at EntreWorks Insights, Erik Pages has listed a summary of the candidates’ positions on economic development and the innovative economy:
We’ve dug through the various candidate’s web sites and position papers and tried to give a sense of how they might govern in issue areas such as regional economic development, science and technology, innovation, and the like. It’s still a little early for extremely detailed policy proposals, but you can get a sense of how candidates might govern if elected to our nation’s highest office.
I won't try to summarize that various candidate's positions - you will have to read the articles yourself. But I will make a quick comment on the framing of the issue. I found it very interesting that Business Week says "innovation is not simply invention." But they fail to focus on this, choosing rather to look at the four specific areas of R&D. In other words, innovation is not invention but is R&D and S&T. No questions about other aspects of innovation policy -- such as the role of the government beyond basic research or questions about financing/venture capital or about how to stimulate and capture user-driven innovation or the role of the US in a global innovation system. BW does get kudos for raising the question of measuring innovation.
The EntreWorks summary covers a broader range of topics, but suffers from that problem of all summaries - it is a distillation of what the candidates have already said, not what questions need to be asked. In all fairness, of course, EntreWorks doesn't have the clout of a Business Week in asking the questions.
This Presidential election cycle is It is both compressed and strung out. The compression is in the front end of the primaries. It is possible that we will know the nominees by the President's Day break. It is strung out in that it has been going for some time -- and we are only now under a year from the election date. So there will still be plenty of time to ask the key questions of the candidates. And for the candidates to refine and expand their positions on innovation and the I-Cubed Economy – beyond the standard answer of “more R&D.”
Posted by Ken Jarboe at 08:25 AM | Comments (0) | TrackBack
November 21, 2007
The power of retail
I realize that retail shopping is what ultimately makes the economy go (all those gods and services we produce have to be bought by someone). I also realize that we are approaching the biggest shopping day of the year. And I realize that Wal-Mart is the largest retail outlet. But I did find this bit of news a little weird -- When Every Day Feels Like Black Friday - washingtonpost.com:
Because it expects Saturday to be so similar to Black Friday, Wal-Mart has requested that the two days be merged into one, creating a 48-hour Friday. The company even sent a letter to honorary Astronomer Royal Martin Rees, professor of cosmology and astrophysics at the University of Cambridge in England, to request his blessing.
"Does a week always have to contain seven days? And do those days always have to be the seven we're accustomed to?" wrote Nick Agrawal, vice president of Wal-Mart's corporate communications. "Certainly here in the U.S., those seeking more time for their holiday shopping, the addition of a second Friday might be just what they're looking for."
However, Wal-Mart is petitioning the wrong person. The International Bureau of Weights and Measures in France is the world's official time-keeping organization. Its U.S. branch is the National Institute of Standards and Technology, which falls under the Department of Commerce.
Reached by phone in his office in Cambridge, Rees was at a loss for words on Wal-Mart's double-Friday request. "I am completely flummoxed over this conversation," he said.
Last I checked, the definition of a day is based on the natural phenomena of the sun traversing the sky -- including sunrise and sunset. As powerful as Wal-Mart is in the Intangible Economy, I don't think it can make the sun stand still.
But, I guess it was worth a try. Have a Happy Thanksgiving!
Posted by Ken Jarboe at 08:54 AM | Comments (0) | TrackBack
November 20, 2007
Can design save GM?
To answer this question, listen to this Business Week podcast with Ed Welburn, GM's design chief at Redesigning General Motors.
One comment -- this is about "design" as product development. Some examples are tapping into the expertise of design studios in Brazil and Korea in the understanding small cars and the use of design in differentiation of brands. Not the same as "design thinking" - where the design method is used in business strategy. But it gets close, especially the discussion of the strategic mission of concept vehicles: introduce new technologies, help explore and establish brand.
Posted by Ken Jarboe at 09:28 AM | Comments (0) | TrackBack
A proxy for the trend toward the intangible economy
I ran into this piece of information in a recent Economist story on oil prices -- Economics focus: Shock treatment:
Rich countries use less than half as much oil as they did in 1970 for each inflation-adjusted dollar of GDP. So although prices in real terms have returned to levels last seen in the 1970s, their impact is not as powerful when set against the diminished economic importance of oil (see charts).
That is a strong measure of the extent to which the economy is becoming, as Alan Greenspan used to say, "weightless."
Posted by Ken Jarboe at 08:54 AM | Comments (0) | TrackBack
November 16, 2007
Inside Innovation
The latest issue of Business Week's Inside Innovation is available on line. Looks like a good set of stories: Innovation at HP, Design at Ford, How the Presidential candidates view innovation, to name a few. More comments on the individual stories later.
Posted by Ken Jarboe at 08:39 AM | Comments (0) | TrackBack
Some things never change
I recently came across a book written over a hundred years ago by the English journalist William Thomas Stead, entitled The Americanization of the World, Or The Trend of the Twentieth Century (available through Google Book Search). Stead was a popular writer of his time, who later perished on the Titanic. The core argument of this book was that Britain could only guarantee future glory if it re-united with the United States (essentially on the US's terms). Quite a remarkable thing to say in 1902, at the height of Britain's hegemony.
Most of the book is about how American culture, products and influence is spreading across the entire globe. A few comments caught my special interest. The first is this statement:
In the Twentieth Century there seems to be ample ground for believing that the Americans will distance us in science more decisively than in almost any other department of human activity. The reason for this lies, not only in the genius of the people, but because of the provision made for scientific research by the munificence of American millionaires is infinitely in excess of anything that is provides in the British Empire.
The second point was this:
Our patent laws, instead of encouraging invention on the part of those who have brains but no money, absolutely handicap the poor man, and leave him helpless to profit by his own inventions.In other words, the policy agenda is funding of basic research and patent reform. Sound familiar?
. . .
The American patent law secures a patentee protection for seventeen years for a total cost of ₤8. To secure a patent for fourteen years in this country requires an expenditure of ₤99. The American Patent Office makes a fairly thorough examination of a patent, and, if required, the applicant is assisted to put his application into proper shape. With this stimulus to invention, it is not surprising that the inventive genius of the American has outstripped that of the Old World. Fortunately this can be remedies, for our Patent Office is one of those institutions which can be Americanised with the greatest ease.
Two other quick points. Stead makes much of the American educational system as a source of our success. That too sounds familiar. But he also points out this factor:
Not only do the Americans equip all their universities with magnificent apparatus and adequate endowment, but they send their ablest student abroad to study with the best experts in every branch of science. They tap the brains of the world, and keep themselves fully abreast of the latest results of modern research.
That ability to absorb information and knowledge from where ever it may be found is something that has been lacking at some times in our recent past. The not-invented-here syndrome and the belief that we were the pinnacle of knowledge have been all too familiar as well.
Happily the US innovation system as currently evolving is embracing the open innovation process - restoring that ability to "tap into the brains of the world." Unhappily, travel restrictions and immigration policies are making it more difficult. One step forward, one step back.
Some things never change.
Posted by Ken Jarboe at 08:17 AM | Comments (0) | TrackBack
November 15, 2007
Consumer Electronic Show awards - and not green
Business Week has this story on this weeks' announcement of the Consumer Electronics Show innovation awards - CES Awards: A Push to Innovate:
This year, the judges lauded pared-down designs which focused on blending functionality with panache. The Bowers & Wilkins Zeppelin iPod dock, for instance, is an audacious form which still promises high quality sound projection. The Drop cellphone handset, by fuseproject, is an exercise in radical chic, with a form based on the shape of a water drop.
Of more concern to eco-watchers was this year's apparent lack of focus on issues of sustainability. Last year's awards were clearly green-themed, with winners including Herman Miller's (MLHR) eco-aware, LED-clad Leaf lamp and Intel's (INTC) energy-efficient Core 2 Duo processor. Despite the judges' insistence that green criteria make up an important part of the judging process, the lack of a statement could signal the environmental train is running out of steam.
Either that, or the designers are still struggling between cool design (panache) and functionality (as characterized by eco-sustainability). Or maybe it is a continuation of the clash between performance and eco-sustainability.
In any event, designers need to move beyond this either or. Designs shouldn't win because they are eco-sustainable. Eco-sustainability should be an integral part of all designs. Eco-sustainability should be a threshold criterion - not something that you give bonus points for.
Posted by Ken Jarboe at 09:34 AM | Comments (0) | TrackBack
November 14, 2007
Consequences of information overload
Sticking with the theme of information overload, I ran across this quote from columnist Jeffrey Shaffer back in February (A drawback of the Information Age | csmonitor.com):
The old saying that knowledge is power still holds true, but how does anyone with a thirst for knowledge avoid being drowned by the tsunami of information that crashes over us each day? My fear is that many Americans are sliding into a narrow groove that includes a few topics of personal interest, and everything outside the groove is simply ignored.
A serious concern -- but not a new one. There seems to be two conflict impulses in human beings. One is to retreat into narrow grooves - something that we seem to have done since the dawn of time. The other is the hunger for information/gossip. The impact of TV news was to shake up those grooves for a while by playing to that hunger. For a while, I think we got the balance right. Not perfect, but close. We will see whether the new media will be able to find its own balance.
Posted by Ken Jarboe at 11:15 AM | Comments (0) | TrackBack
Is it all just noise?
One of the reoccurring themes on this blog is the problem of information overload. Apropos that theme, I found this interesting comment in the most recent Economist's story on social networking (Conversational marketing: Word of mouse):
Yet another problem, says Paul Martino, an entrepreneur who launched Tribe, an early social network, is that the interpersonal connections (called the “social graph”) on such networks are also of low quality. Because few people dare to dump former friends or to reject unwanted friend requests from casual acquaintances, “social graphs degenerate to noise in all cases,” he says. If he is right, social-marketing campaigns will descend into visual clutter about the banal doings of increasingly random people, rather than being the next big thing in advertising.
I sense "the next big thing" here: services/tools/applications to sort through all the noise created by the last "next big thing."
Posted by Ken Jarboe at 10:57 AM | Comments (0) | TrackBack
November 13, 2007
Falling off the Flat Earth?
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Norm Augustine has written a new book, Is America Falling Off the Flat Earth?
Much of the book is an expansion and elaboration of the topics covered in the report he Chaired - Rising Above the Gathering Storm. Like that report, these essays should raise concerns.
One quibble: I think he overstates the "death of distance" argument. There is still a strong need in many areas for tacit knowledge and "being there". But he certainly does not overstate the impact of the telecommunications revolution and the impact it has had (and will continue to have) on US based employment:
It thus appears highly likely that the United States will suffer a substantial wage disadvantage for many years to come and that some means will have to be found to offset that fundamental tilt of the flat earth away from America.
To produce such great accomplishments, our economic system, evidencing its version of what has been called creative destructionism, destroys 29 million jobs each year while generating 31 million new jobs. In fact, about one-sixth of all jobs in the United States are destroyed in any given year. Mathematicians would describe the process as encompassing the most hazardous of calculations in that it concerns relatively small differences between relatively large numbers, and economists would say that the job market is highly volatile. But if one assumed a 10% adverse change in both job creation and job destruction, it would result in the disappearance of twice as many net jobs as are now being added. Such is the tenuousness of life in a modern economy.
For me, one of the most instructive sections of the book is entitled "Welcome to the 21st Century Board Room." Augustine knows of what he speaks. As the CEO of a Fortune 100 company and member of numerous Boards, he has been there.
He hones in on one of the key questions:
it is instructive to ask, What is an American firm? For example, one respected company with which I have been associated as a director for 18 years was founded in the United States well over 170 years ago and maintains its headquarters in the United States, but some 10% of its owners (shareholders) are foreign; over half its customers are foreign; over half its employees are foreign; and not long ago its CEO was foreign. Is that an American firm, or is that a global enterprise? And even if it were judged “an American firm,” the most disastrous thing a CEO could do for any firm’s employees and shareholders alike would be to make business decisions designed to protect the interests of a few if those decisions are harmful to the competitiveness of the organization as a whole and thus endanger the prosperity, even survivability, of the enterprise itself—and the jobs and profits it sustains.
But that outlook extends beyond the Boardroom:
In the case of most large US employers, it is quite probable that a substantial majority of their shares are owned by institutional investors, and the primary, if not sole, interest of that set of shareholders is financial return—preferably near-term financial return—and certainly not the matter of preserving jobs. In fact, announcements of job layoffs in times of prosperity are almost always greeted favorably on Wall Street. Ironically, the institutional investors who own those companies often are fiduciaries for the pension funds of American workers—workers who, for their own part, have seldom displayed any great reluctance to purchase foreign-made cars, television sets, and DVD players if they thought doing so was in their immediate interest as consumers.
He also points out that universities are becoming global:
Not atypically, the University of Chicago states, “We educate the next generation of the world’s leaders, not just United States leadership,” and a few years ago, 260-year-old Princeton University changed its motto from “In the Nation’s Service” to “In the Nation’s Service and in the Service of All Nations.”
Also of interest was his take on the work ethic – or lack there of:
Gilman Louie, the Silicon Valley entrepreneur and former CEO of the high-technology firm In-Q-Tel, tells of attending a lecture by an industrial leader in Japan at which the student audience spontaneously began chanting in unison the Japanese word for innovation. Some businesses in India outfit work cubicles with cots for employees who elect to work late and remain overnight. On a visit to Bangalore, I was told that the young engineers and computer scientists writing software were so committed to their tasks that if an employer simply provides them pizza (yes, in India!) for dinner, “the kids will work all night.” In contrast, in a recent survey of 431 US business leaders, nearly three-fourths cited a lack of work ethic and professionalism as a characteristic of US high-school graduates. (As a case in point, I recently had difficulty gaining the attention of a clerk at—where else?—the customer- service desk of a local computer store because of her ongoing telephone conversation with a boyfriend. When the clerk finally appeared in front of me, I, rather amused by the ridiculousness of the situation, smilingly remarked, “You know, if you worked for me, I’d fire you!” The clerk returned my smile and replied, “That’s why I don’t work for you!”
He goes on:
USA Today reports one US business executive as saying that “[organizations] are realizing it’s less risky to [employ] internationals because they’re more coachable, more socialized, have no posses, and have not been Americanized.” That executive predicts that in his field, by about 2010, foreigners will fill 50% of all the jobs available, compared with the roughly 25% they fill today. The article goes on to assert that US youth are “lacking the fundamentals.”
The executive being quoted was not whom one might expect. It was not the CEO of some high-technology company, such as IBM, Microsoft, or Dell. Rather, it was George Raveling of Nike—speaking of basketball players in the National Basketball Association!
Raveling’s remarks are echoed by Red Auerbach, legendary coach of the Boston Celtics: “All those years I traveled overseas and held clinics, I said to people, ‘You know what? There’s going to come a day when these countries are dangerous for us because these guys are listening. You look at the foreign kids who come over and everyone of them is solid fundamentally. Not our guys. No one can teach them because they all think they are stars when they’re 15.” As if to punctuate his observation, the United States had just finished in sixth place in the world basketball championships.
Former NBA executive Jerry Colangelo could easily have been referring to America’s free-enterprise system and our system of higher education rather than basketball (or baseball, for that matter) when he lamented, “We invented the game, we taught people how to play the game, and they came back and knocked us off the perch.” The two teams in the 2007 NBA finals, San Antonio and Cleveland, had half and one-fourth of their players from abroad (including the tournament’s Most Valuable Player), respectively. Their players came from Argentina, France, Slovenia, Netherlands, Lithuania, Serbia and Montenegro, Brazil, and the Virgin Islands. No fewer than 28 countries were represented on the rosters of playoff teams. NBA Commissioner David Stern is reported in the above mentioned USA Today article as being “startled at how fast the rest of the world has come along.” To take an example from another sport invented in the United States, fully 44% of the starting lineups in last year’s major league baseball all-star game were foreign-born. This trend is being replicated in many fields other than basketball and baseball in which, ironically, other nations are successfully adopting our own proven but oft-ignored practices. In the case of economic competitiveness, the nations posting the most remarkable gains in recent years have to a large extent been doing so simply by copying the attributes of our systems of higher education, business management (pre-Enron era), and free enterprise and in many instances implementing them more effectively than we.
On how we can compete:
Given the immense population disparities among nations, America cannot reasonably hope to produce the same number of engineers as, say, China or India. Nor does it need to do so. What is needed is not more engineers capable of performing relatively routine engineering functions—those jobs have already been commoditized and will continue to move abroad—but more engineers capable of creative, innovative thinking, engineers who can challenge the status quo and “see around corners,” engineers who are entrepreneurs, and engineers whose ideas are bounded only by a solid understanding of the fundamental physical laws of nature.
On Wall Street and innovation:
But before condemning industry, consider the following incident that occurred a few years ago at the company where I was employed. Motivated by an unusually large stable of highly promising research opportunities, the company’s management conducted a briefing for Wall Street analysts to inform them of a planned increase in investment in research and the promise this would offer for the company’s future growth and profitability. At the end of the briefing by the company’s president, most members of the audience ran from the room and sold the firm’s stock. The company’s share price dropped by 11% during the next few days, then gradually declined for nearly 2 years before the tide could be stemmed. When, shortly after the debacle on Wall Street, as the event became known in the company’s research laboratories and executive suite, I asked one of the attendees at the briefing what had been said that was wrong, the analyst impatiently responded, “You should know that it takes 10 or 15 years for research to pay off . . . if it does at all. Your average shareholder owns your stock for about 18 months, doesn’t care what happens to you 10 or 15 years from now, and certainly doesn’t want to pay for it. In fact, by that time the investor will probably own one of your competitors’ shares and would be just as happy if your firm were not competitive.”
On finding our niche:
Even when undertaking all reasonable steps to remain competitive in science and technology, it is unlikely that on the flat earth any nation, even one as wealthy as the United States, can maintain a position of such broad prowess as the United States has enjoyed in recent decades. A few areas can undoubtedly be singled out in which to seek prominence, more areas can be pursued wherein a nation can be a “fast follower” in applying new knowledge, and still more will simply have to be monitored or even forgone.
On the patent system:
The US patent system is in many respects antiquated. In the words of Michael Splinter, CEO of Applied Materials, Inc., “Those of us who are patenting inventions are becoming hostages to those who are inventing patents. The current system is an invitation to litigation.” It seems that the jobs that our patent system is creating are largely for lawyers, not scientists, engineers, and entrepreneurs and those they serve.
On market forces:
It is tempting, especially for people who are disciples of Adam Smith (a group that includes myself), simply to dismiss the untidy competitiveness matter that results from this drift by saying, “Let market forces solve the problem.” But, unfortunately, that is the problem—at least from America’s perspective. Indeed, market forces are solving the problem. They are solving it by moving jobs outside the United States and by reducing or limiting compensation and benefits for employees who remain in the US workforce.
. . .
The irony is that “American” companies may well survive, and their owners even prosper, but market forces will cause this to be at the expense of America’s workers. In such a scenario, America could evolve into a nation comprising a number of extremely wealthy shareholders (fully 55% of Finland-based Nokia’s shares are owned by Americans) and a few corporate headquarters (at least for a time) mired in an enormous sea of unemployment. That is not a formula for stability, national security, or quality of life for most of America’s future citizens.
I especially like his 7 intangibles of the innovation ecosystem:
The first is an environment that provides researchers and inventors the freedom to explore—an environment that offers creative, inquisitive people the opportunity to pursue promising new avenues that may appear unexpectedly in their research and to be rewarded for their successes.
The second element is an atmosphere wherein disruptive ideas are welcomed, not discouraged or dismissed.
Third is an environment that is tolerant of risk—not irrational, injudicious, intemperate, or “overly exuberant” risk but rather prudent risk based on considered judgments that offer commensurate payoffs.
Fourth is an understanding that failures must not be unreasonably punished.
Fifth is an environment that produces and facilitates the search for discontinuities.
Sixth is an interactive environment wherein creative people can identify and pursue synergistic cross-cutting technologies.
Seventh is the acceptance of the notion that those responsible for managing the innovation process must not run around pulling up the flowers, as the saying goes, to see whether their roots are healthy. Patience, continuity, and their close relative perseverance are all fundamental catalysts of successful innovation.
Those are some of the insights I've taken away from the book. I'm sure you will find your own.
Posted by Ken Jarboe at 08:29 AM | Comments (0) | TrackBack
Standardizing ads
Much of the new economic focus these days is on creativity and customization: "right now and just for me." But even in the I-Cubed Economy, the allure of standardization is great (and profitable). This is especially true as services attempt to increase productivity. One technique is the standardized template -- think Microsoft's document templates. Here is another example from the one of the most creative of industries - advertising - and one of the most personal forms - the political ad. Web Start-Up Offers Canned Campaign Ads - washingtonpost.com:
For $499 plus the cost of airtime, Spot Runner will plug your photo and personalized narration into a generic ad and air it on television in about a week. By comparison, traditional ad agencies can charge thousands of dollars, and the creative process can take months.However, there are limits to the holy grail of standardization: scalability --
. . .
Spot Runner's political-ad division, which launched this year, is a small part of the online agency's "ready-to-air" ad business. A handful of young Web companies -- Spotzer, Pick-n-Click Ads, Cheap TV Spots -- offer similar template ad services to car dealerships, jewelers, fitness clubs and other businesses that don't have big advertising budgets.
The ads aren't for those looking to be unique. Templates are created mainly from stock footage and file photos, which eliminate the high costs of camera crews and filming.
Spot Runner promises clients that their ads will run exclusively in a given market to ensure that viewers don't see the others using the template.Do the ads work? Well, that begs a larger question as to whether any political ads really work. In the most recent election in Virginia, one candidate who used the ads won and one lost. What TV ads like this is promote name recognition and awareness. So don't expect the big boys and girls to be using these services anytime soon. In those races, uniqueness is a major factor.
But for local races where getting your name out is half the battle, these low-cost ads may be a way to have a big time splash. As Del. Robert G. Marshall (the winner) is quoted as saying:
"I was in Costco walking down the aisle to get some maps," he said. "A guy stopped me and said: 'You're Delegate Marshall. I saw your ad.' "And for a political candidate, that is a gold mine - delivered through a low-cost standardized product.
So, as services expand, look for this paradox: standardization and uniqueness running in parallel. Both are important factors in the I-Cubed Economy.
Posted by Ken Jarboe at 08:16 AM | Comments (0) | TrackBack
November 12, 2007
Intellectual Ventures goes global
The patent holding company, Intellectual Ventures is going global. According to the Wall Street Journal:
Intellectual Ventures LLC, a low-profile investment firm run by former Microsoft Corp. executive Nathan Myhrvold, is laying plans to go global: It hopes to raise as much as $1 billion to help develop and patent inventions, many of them from universities in Asia.
The move could help the firm, formed seven years ago to purchase patents and help inventors dream up new ones, expand its already-vast store of patents. But the new push also could exacerbate concerns that Intellectual Ventures will begin launching lawsuits to pressure companies to pay for use of its intellectual property.
Mr. Myhrvold said that his firm hasn't sued anybody for patent infringement but that he can't rule it out in the future.
Intellectual Ventures, which said it couldn't comment on any current fund raising, employs about 200 people. It is also raising another, separate fund valued at more than $1 billion to buy up existing patents globally, people familiar with the matter say.
Until now, the firm has focused mainly on buying existing patents in the U.S. -- though it has done some work overseas -- and on dreaming up new inventions in-house with its own group of experts. It has bought thousands of patents but only 26 of its own inventions have been approved so far, according to a spokeswoman. The original patents cover areas such as digital imaging, medical devices and solid-state physics.
The firm had licensing revenue in the hundreds of millions of dollars last year, one person familiar with the matter said.
The Intellectual Ventures model has made some people nervous, especially the massing of a large patent portfolio that could be used in litigation (as the Journal article and a piece I posted last year relate). But Myhrvold says he is trying to help inventors and to create a more liquid market for intellectual property. If they do that, then they will be moving the innovation process along. If they end up simply suing everyone and blocking innovation, then they are a problem. Right now, the evidence seems to be on the former.
So, for now - more power to them.
Posted by Ken Jarboe at 10:37 AM | Comments (0) | TrackBack
Record label as promoter
I've posted items in the past about how the model of the music business needs to change. One version is the record label as full scale promoter (as I discussed earlier this year). A story in yesterday's New York Times --
The New Deal: Band as Brand explains about the "360 contract" and how it is helping one new band, "Paramore".
Though its success is in large part due to smart pop songwriting and a fashion-forward frontwoman, music executives and talent managers also cite Paramore as a promising example of a rising new model for developing talent, one in which artists share not just revenue from their album sales but concert, merchandise and other earnings with their label in exchange for more comprehensive career support.
If the concept takes hold, it will alter not only the way music companies make money but the way new talent is groomed, and perhaps even the kind of acts that are offered contracts in the first place.
Commonly known as “multiple rights” or “360” deals, the new pacts emerged in an early iteration with the deal that Robbie Williams, the British pop singer signed with EMI in 2002. They are now used by all the major record labels and even a few independents. Madonna has been the most prominent artist to sign on (her recent $120 million deal with the concert promoter Live Nation allows it to share in her future earnings), but the majority of these new deals are made with unknown acts.
. . .
Like many innovations, these deals were born of desperation; after experiencing the financial havoc unleashed by years of slipping CD sales, music companies started viewing the ancillary income from artists as a potential new source of cash. After all, the thinking went, labels invest the most in the risky and expensive process of developing talent, so why shouldn’t they get a bigger share of the talent’s success?
In return for that bigger share, labels might give artists more money up front and in many cases touring subsidies that otherwise would not be offered. More important, perhaps, artists might be allowed more time to develop the chops needed to build a long career. And the label’s ability to crossmarket items like CDs, ring tones, V.I.P. concert packages and merchandise might make for a bigger overall pie.
Not everyone is sold on the concept. Many talent managers view 360s as a thinly veiled money grab and are skeptical that the labels, with their work forces shrinking amid industrywide cost cutting, will deliver on their promises of patience.
. . .
Even inexperienced performers may resist sharing their take from the box office, particularly at a time when plunging CD sales have pushed artists to rely even more on their concert earnings.
But record executives argue that such deals could free them from the tyranny of megahits because there would be less pressure to make back the label’s money immediately. In the 1990s the arrival of computerized data from SoundScan, which tracks retail sales, meant the industry had an instant scorecard that tempted companies to push for Hollywood blockbuster-style opening weeks. The demand for quick payoffs persisted, even though a review of the last 15 years of Billboard data shows the albums that immediately seized spots on the upper half of the Billboard Top 200 chart would go on to sell fewer copies, on average, than the releases that slowly worked their way up.
I'm not sure that this new business model is an answer to the "download challenge". It does represent an understanding on the part of the record labels that the money isn't just in the sale of recordings. That is a step forward.
Posted by Ken Jarboe at 08:18 AM | Comments (0) | TrackBack
November 09, 2007
September trade in intangibles
This morning's BEA trade data shows a slight decline in the overall trade deficit in September -- down $300 million to $56.5 billion from $56.8 billion in August. That decline is being attributed to the falling dollar. And, as the New York Times reports “that was the narrowest trade imbalance since May 2005 and took economists by surprise. They had been forecasting the deficit would rise.” According to the Wall Street Journal, “The U.S. trade gap unexpectedly narrowed in September, despite record prices for imported crude, as heavy foreign demand for American-made food products and industrial supplies helped export growth outpace imports.”
The intangible trade balance however worsened slightly, reversing last month’s improvement. Our surplus in intangibles dropped by $44 million compared to a $40 million improvement in August. The September surplus was $10.14 billion. Both royalty payments (imports) and receipts (exports) grew by a small amount, as did both imports of business services. But exports of business services dropped by $30 million.
So, basically a wash over the last two months. For the year (October 2006 to September 2007 compared with October 2005 to September 2006), our surplus has grown by $17 billion. Slow but measurable progress.
The deficit in Advanced Technology Products also worsened slightly. The September deficit grew to $5.2 billion compared to $4.7 billion in August. The balances in life sciences and electronics improved while he balances in aerospace, biotechnology and information and communications technology (ICT) worsened. Our biggest deficit remains in ICT (a deficit of almost $9.3 billion) while the biggest surpluses are in aerospace (a surplus of $4.4 billion) and electronics ($2 billion). The last monthly surplus in Advanced Technology Products was in June 2002 and the last sustained series of monthly surpluses were in the first half of 2001.
Note: we define trade in intangibles as the sum of "royalties and license fees" and "other private services". The BEA/Census Bureau definitions of those categories are as follows:
Royalties and License Fees - Transactions with foreign residents involving intangible assets and proprietary rights, such as the use of patents, techniques, processes, formulas, designs, know-how, trademarks, copyrights, franchises, and manufacturing rights. The term "royalties" generally refers to payments for the utilization of copyrights or trademarks, and the term "license fees" generally refers to payments for the use of patents or industrial processes.
Other Private Services - Transactions with affiliated foreigners, for which no identification by type is available, and of transactions with unaffiliated foreigners. (The term "affiliated" refers to a direct investment relationship, which exists when a U.S. person has ownership or control, directly or indirectly, of 10 percent or more of a foreign business enterprise's voting securities or the equivalent, or when a foreign person has a similar interest in a U.S. enterprise.) Transactions with unaffiliated foreigners consist of education services; financial services (includes commissions and other transactions fees associated with the purchase and sale of securities and noninterest income of banks, and excludes investment income); insurance services; telecommunications services (includes transmission services and value-added services); and business, professional, and technical services. Included in the last group are advertising services; computer and data processing services; database and other information services; research, development, and testing services; management, consulting, and public relations services; legal services; construction, engineering, architectural, and mining services; industrial engineering services; installation, maintenance, and repair of equipment; and other services, including medical services and film and tape rentals.
Posted by Ken Jarboe at 08:56 AM | Comments (0) | TrackBack
November 08, 2007
Securitization market moves forward
Even in this time of meltdown, at least one new product is reaching the securitization market -- Reverse Mortgages To Back Bond Issue - WSJ.com:
Federal housing-finance agency Ginnie Mae plans to roll out as soon as today what it calls the first "standardized" bond issue backed by reverse mortgages, a move aimed at boosting liquidity for one of the fastest-growing markets targeting baby boomers.
The offering, expected to total about $120 million, consists of more than 1,000 government-insured reverse mortgages, which allow homeowners 62 years old or older to turn home equity into income they don't have to repay until they sell their homes.
Such loans have grown rapidly in popularity in recent years, thanks to the nation's aging population, a lack of retirement savings and the rapid house-price gains in the first half of this decade. At the same time, a lack of a liquid secondary market for reverse mortgages -- where lenders can sell, as opposed to hold, the loans they make, just as what they do with traditional mortgages -- has constrained this growth.
Ted Foster, senior vice president for mortgage-backed securities at Ginnie Mae, said bundling reverse mortgages into securities could increase liquidity by providing capital-market funding sources to lenders and ultimately help drive down costs for consumers. "Our objective is to get the best price for consumers by supporting the underlying product," he said. "Two years from now, the market [for reverse-mortgage-backed securities] will be there."
For years, Fannie Mae, the government-sponsored provider of funding for home mortgages, has been the dominant buyer of reverse mortgages. Recently, lured by the product's growth potential as baby boomers retire, more financial-services firms, including Lehman Brothers Holdings Inc. and Bank of America Corp., have been buying these high-yielding loans from lenders with the idea of repackaging them into securities for sale to investors.
But Mr. Foster said until now, reverse mortgages have been packaged and sold by investment banks only to a limited number of investors through private placements -- via a complex tax-free structure called a Remic. The Ginnie Mae deal, he said, represents the first standardized reverse-mortgage security on the market and should help "open up the universe" to more investors, especially those with long-term investing horizons such as pension funds and insurance companies.
This is good news for the securitization of intangibles. It proves that with a well structure and standardized product, it is still possible to bring a new product to the capital markets in these turbulent times. Of course, the Ginnie Mae government guarantee certainly helps.
Now, all intangibles securitization needs is a standardized product (and a government guarantee?).
Posted by Ken Jarboe at 10:19 AM | Comments (0) | TrackBack
Hollywood wars - part 2
As a follow up to my posting yesterday, I would like to point out Henry Chesbrough's interesting take on the writers strike in his Business Week piece Behind the Hollywood Strike Talks:
What makes the often fractious negotiations particularly interesting this time are the underlying business-model challenges confronting both sides. Business models enable companies (and organizations such as the 12,000-member Writers Guild of America or the Alliance of Motion Picture & Television Producers) to create and capture value. Once established, successful models often take on a life of their own. This can lead to inertia, and a prevailing model can drift out of alignment with the future needs of an industry.
That's what has happened here. The traditional business models of both sides worked well when there were a handful of movie studios and three major TV networks. But now everyone can be a writer or a producer, and every computer is potentially a studio, able to create and publish content. More than 1 billion people on the planet are connected to the Internet, a healthy portion of them via high-speed broadband.
. . .
Both sides need to change some strongly held business models to seize new opportunities—a process that has many risks, but potentially lucrative rewards. However, if Hollywood cannot rise to the challenge, the independent, online creative communities stand ready to pounce. The one thing that seems sure is that neither side has a choice.
Good point!
Posted by Ken Jarboe at 09:43 AM | Comments (0) | TrackBack
The machine versus the virus
One of the things that has concerned me about our conduct of the "war on terror" has been the asymmetry. Al-Qaeda and others operate as networks; our response was to re-arrange the bureaucracy (Department of Homeland Security). We are using a machine and industrial age mentality (as seen in the rhetorical references to the ultimate industrial age war – WWII) to fight a virus and an information age war. If, in fact, we are now in the first war of the information age, then we need to fight it differently than the wars of the industrial age.
That point was struck home reading two book reviews in the latest issue of the Economist. One was a review of a new biography of one of the leading polemist -- Architect of Global Jihad: The Life of Al Qaeda Strategist Abu Mus'ab al-Suri by Brynajar Lia (see The brains behind the bombs). As the review points out:
His life's work is a 1,600-page opus, “The Global Islamic Resistance Call”, which started to take form in the early 1990s. In it, Mr al-Suri argues that jihadis should avoid creating hierarchical structures, which are vulnerable to attack by local or American security forces, and move instead to a decentralised system of individuals or small local cells linked only by ideology.
Clearly a virus model based on a networked approach.
The second was a review of Winning the Right War: The Path to Security for America and the World by Philip H. Gordon (see Blowing cool, blowing hot):
In his five long chapters Mr Gordon makes a case for reinvigorating the toolbox employed in the cold war for the fight against terrorism. Containment, dedicated diplomacy designed to win friends and allies, investment in promoting Western moral authority and a smart defence strategy worked then, and can work again, he argues. If this approach is followed, he suggests, Islamist extremism, like communism before it, will collapse not because it was defeated militarily but because it will fail to inspire large numbers of people.
This last sound more like a strategy based on the power of intangibles.
So, maybe this isn't the first war of the information-intangible age after all. Maybe we have been fighting information age wars for a long time – we just haven’t recognized them (the Cold War being a prime example). Just as information and intangibles have played a role all along in our economy (and we are focusing on it much more right now), intangibles and information have always played a role in warfare. One of the most famous, yet overlooked, quote from Sun Tzu on the Art of War is:
to fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy's resistance without fighting.
To do so requires matching our organization, strategy and tactics to our adversaries. And converting adversaries into allies (“attacking their alliances” as Sun Tzu said).
Sound advice from 2500 years ago.
Posted by Ken Jarboe at 08:33 AM | Comments (0) | TrackBack
November 07, 2007
The Hollywood wars
Things are escalating in the Hollywood wars, raising tension between studios and their writers. As the Los Angeles Times reports, the studios appear to be using the writers strike to clean house:
A day after Hollywood's writers went out on strike, the major studios are hitting back with plans to suspend scores of long-term deals with television production companies, jeopardizing the jobs of hundreds of rank-and-file employees whose names never appear in the credits.
. . .
These suspensions stop payments to production companies that are largely bankrolled by studios, which count on them to come up with the next "Grey's Anatomy" or "House." Under multi-year deals, studios such as Warner Bros., Walt Disney Co., and 20th Century Fox pay for the salaries, the office space, the project development costs, even the utilities whether these entities generate hits or not. Producers and writers typically serve as creative heads of these companies, which vary in size from a handful of employees to hundreds, most of whom do not belong to the WGA.
The major studios that have issued or are planning suspensions include Fox, CBS Paramount, Disney, Warner Bros. and NBC Universal. Sony has yet to act, two people familiar with the issue said. Not all production companies financed by the studios will be cut off. The most prolific ones, run by such high-profile figures as David E. Kelley ("Boston Legal," "The Practice") and John Wells ("ER"), are unlikely to be touched, according to studio executives.
If the strike continues for long, some studios are expected to follow suit with their less fruitful movie production deals, using the same escape clause.
The employment contracts that studios have with talent contain a provision known as force majeure that allows them in a crisis situation such as a strike to suspend and terminate deals. Before a deal can be ended, a studio must first suspend it for a period of time, typically for four to eight weeks.
Some studios are using this clause to purge expensive and unproductive arrangements, according to industry executives.
"It's so sick," said one television writer worried about getting a suspension letter who asked not to be named for fear of losing his job. "The studios are using the strike to clean their books, getting rid of the writers they don't want and keeping the ones they do."
Dana Gould, a former writer on "The Simpsons," described the studios' tactic as a "controlled burn" strategy that would save these giant companies millions of dollars. He said the timing couldn't be better, amid television's recent poor ratings.
"It's a reboot. They want to hit Control-Alt-Delete on the fall season," Gould said.
This is a risky tactic -- profitable in the short run but dangerous in the long run. As one leader of the Writers Guild is quoted in the in LA Times story, "This is an industry based on talent, and to break relations with the most talented people in town is not a very good business plan." Hollywood is one of the most intangible intensive industries in the world. Those intangibles are not just the talent, but the set of relationships. To the extent that those intangible assets flow elsewhere or are irreparably damaged, the industry is vulnerable.
We will see how this develops. It may be a case of the bean counters looking for a short term gain by dumping unprofitable arrangements. It might also be a highly strategic move to rearrange the organizational power structure in the industry. In either case, the studios and the writers have tossed the dice.
Posted by Ken Jarboe at 08:48 AM | Comments (0) | TrackBack
November 06, 2007
Services confusion
This morning, the Institute for Supply Management (ISM) released its index of nonmanufacturing activity -- showing an economic rebound. That is good. But the reporting on this index is bad -- and misleading. The index gets reported as "services" -- as in this story Service Sector's Rebound Reflects Strength in Exports - WSJ.com. It is not a "services" index; it is a non-manufacturing index. There is a huge difference between the two. For example, the ISM non-manufacturing index includes the following industries: Agriculture, Forestry, Fishing & Hunting; Mining, and Construction. In addition, the survey includes both what I call tangible services (involving physical activities) and intangible services (not involving physical activities). It also includes both transactional services (such as Retail trade and Transportation & Warehousing) and informational services (such as Professional, Scientific & Technical Services, and Educational Services).
The ISM gets it right -- this is a measure of the non-manufacturing portion of the economy. It is the reporters and the press who get it wrong. It simply illustrates how locked in to an outmoded mentality we are. If it is not manufacturing, it must be services, right? Wrong, wrong, wrong.
Posted by Ken Jarboe at 08:49 AM | Comments (0) | TrackBack
Trade secrets
While most of the focus is on patents, here is a story to show that the concept of trade secrets is still alive and well. IRobot wins injunction against competitor - The Boston Globe:
A federal judge in Boston has issued an injunction against a Chicago-area robot maker accused of stealing trade secrets from iRobot Corp. of Burlington.
In August, iRobot sued Robotic FX Inc. of Alsip, Ill., a company founded by former iRobot engineer Jameel Ahed. IRobot claimed that Ahed had used iRobot trade secrets in the building of a robot called the Negotiator, which beat out iRobot's PackBot for a $280 million military contract.
After the suit was filed, detectives hired by iRobot witnessed Ahed trying to discard iRobot-related materials. Ahed also acknowledged shredding data CDs and erasing hard drives. Ahed said he was not destroying evidence, but US District Judge Nancy Gertner said his behavior "gives rise to a strong inference of consciousness of guilt" and "profoundly undermines Ahed's credibility as a witness."
During closed court hearings, iRobot discussed three areas in which it claimed the company's trade secrets had been stolen by Robotic FX. Gertner refused to issue an injunction covering two of the areas, saying iRobot had revealed some of the information in a patent filing, thus undermining its status as a trade secret. But Gertner said there was good evidence that Robotic FX may have misappropriated iRobot technology used to make the rubber tracks that propel its robots. "While Ahed claims that he developed the track independently, this court will not credit his testimony," Gertner wrote. Because the tracks are vital to the operation of the Negotiator robots, the injunction is a major barrier to continued manufacturing operations at Robotic FX - at least until a trial is held in April.
Of course, patents are totally out of this case. iRobots actually filed two cases -- a trade secrets case in Boston and a patent infringement case in Alabama. No word on the status of that case.
There is an interesting national security twist to this. RoboticFX won a contract to build 3000 bomb detection robots for the Army -- a contract which is now on hold.
Posted by Ken Jarboe at 08:23 AM | Comments (0) | TrackBack
Homers
No, not the blind Greek poet or Bart Simpson's dad. Homers are, according to a study by Harvard Business School professor Michel Anteby (Homers: Secrets on the Factory Floor — HBS Working Knowledge), those things that skilled workers make at the shop for personal use:
A factory worker uses company time and materials to fashion a lamp he will take home for personal use—an artifact called a "homer." The practice is probably illegal and clearly against written company policy. If discovered, the worker could be fired on the spot for his action.
The consequences of homer making seem cut and dried. But not so fast, says Harvard Business School assistant professor Michel Anteby. In interviews with retirees of the French Pierreville aeronautics plant, Anteby found, perhaps not surprisingly, a veil of secrecy around the practice—but also a quiet complicity between workers and management.
Perhaps most surprising of all, Anteby argues, is that the practice may help some organizations be more effective. Homer making keeps teams together and skills sharp during idle times in the highly cyclic aeronautics business, for example. Also, someone's well-crafted homer can be a source of pride when fellow workers take note. Says Anteby: "If employers are able to tap into these drivers, and remain within the legal boundary, then they might be in a better position to allow their employees to blossom."
As Anteby admits, homers are not just an industrial phenomena. Lisa Takeuchi Cullen amplifies on that point in her blog yesterday -- I thought Homer was Bart's dad - Work in Progress - Worklife - Workplace - TIME:
Hmm. I don't work in a factory, and can make nothing of use with my bare hands (I can fashion a Play-Doh pony for my kid to enjoy smooshing, but, again, I said of use). But I'm sure I've used company resources and company time for personal needs.
Like when I was a writer at Money magazine, I used my skills and resources as a personal finance reporter to research estate planning implications for expat Americans. In fact, I did pitch and write a story on the subject—but only because I needed to apply the information to my father's situation. I bet you I'm not alone; plenty of reporters work on stories merely to satisfy a personal need to know how it turns out. And don't get me started on my friends at consumer magazines. The editor needs new curtains? A fall feature on draperies it is!
Anteby looks at the homer phenomena with somewhat of an industrial eye: the production keeps skills in tune during stack time. But with work and personal time blurring, the balancing act for both employees and employers has become more difficult. Working out that balance is important to the smooth operation of the new networked organization of production that is a hallmark of the I-Cubed Economy. Use of "company time" for personal activities -- or, more common using company time to benefit both company and personal needs, as in the Cullen example -- is a needed way of maintaining that balance.
After all, part of the I-Cubed Economy is also the "Always On" Economy. And if you are always on, you need to find some time to be off.
Posted by Ken Jarboe at 07:55 AM | Comments (0) | TrackBack
November 05, 2007
India gets it
Over two years ago, the India created a National Knowledge Commission. According the charter, the National Knowledge Commission is a high-level advisory body to the Prime Minister of India, with the objective of transforming India into a knowledge society. At our conference in September on The Dragon and the Elephant: Understanding the Developing Innovation Capacity in China and India , we were privileged to hear from the Chairman of the Commission, Sam Pitroda. His presentation outlined the work of the Commission in a number of areas, including education and access to information (including but not limited to issues of libraries, translation of documents/publications, information portal etc.). Recommendations in these areas were made earlier this year. Ongoing work includes increasing science and technology research and education and the application of knowledge to practical uses in agriculture and industry (including the promotion of entrepreneurship).
I was especially interested to see the focus on the dissemination of information. In a nation such as India, with multiple languages and a sprawling library system, such a focus is critical. But problems of dissemination of information are not confined to nations such as India. The US information dissemination system needs to be addressed as well. Here, the challenges are different. In some cases, it is a challenge of information overload. In others, it is the problem of the information-divide. And then there are all the issues of what should be proprietary (and private) versus what should be public. And who should have access to what information (both the issue of public access to information and the issue of privacy).
The Indian National Knowledge Commission should help that nation move into the I-Cubed (Information-Innovation-Intangible) Economy. It can also provide us with some pointers and lessons - if we bother to pay attention.
Posted by Ken Jarboe at 10:15 AM | Comments (0) | TrackBack
November 02, 2007
Inventions of the Year
TIME has published its list of - The Best Inventions Of The Year. In not too much of a surprise, the iPhone took top place. The list is techie-gadgets (and being an ex-engineer I still love techie gadgets). No social invention here - which I think is very limiting in its view (although Henry Ford gets credit for an organizational invention - the assembly line). Maybe next year they can broaden the categories.
But still a fun read.
Posted by Ken Jarboe at 10:02 AM | Comments (0) | TrackBack
October employment numbers
This morning's employment numbers showed a surprising increase in payrolls. As the New York Times reports:
The economy added 166,000 jobs in October, the fastest pace in five months, as payrolls grew in the service sector. The report could ease analysts’ fears of a slowdown and stocks markets appeared poised to rally on the news.
The estimate of job growth, which came in ahead of Wall Street’s expectations, follows a downwardly revised 96,000 gain in September and a 93,000 gain in August, the Labor Department said. Last month’s expansion suggests the labor market is recovering from a summer slowdown, though payrolls are increasing at the slowest annual rate since June 2004.
The numbers follows a trend we generally hear every month, (from the Wall Street Journal):
The Labor Department said hiring last month in goods producing industries fell by 24,000. Within this group, manufacturing firms cut 21,000 jobs. Construction employment was down by 5,000, the fourth-straight decline. Repeating a recent pattern, nonresidential construction fared much better than residential building.
Service-sector employment, in contrast, swelled 190,000, the biggest rise since May. Business and professional services companies' payrolls spiked 65,000. Education and health services employment advanced by 43,000. Leisure and hospitality rose 56,000, while the government added 36,000 jobs.
This data is based on payroll employment by industry. Sometimes it is more interesting to look at occupations. As part of the employment data, BLS publishes non-seasonally adjusted year to year occupational data – in this case Oct 2006 to Oct 2007.
Management, business, and financial operations occupations, Professional and related occupations, Service occupations and Production occupations all showed an increase in employment. The surprise here is with the production occupations. Sales and related occupations, Office and administrative support occupations, Installation, maintenance, and repair occupations and Transportation and material moving occupations all lost jobs. Farming, fishing, and forestry occupations and construction and extraction occupations were essential unchanged.
That presents a different picture from the standard “services up – manufacturing and construction down” scenario.
The other interesting – and some what anomalous – bit of information comes from the unemployment data. One would expect that the number of unemployed would go up in those occupations where employment went down (and visa versa). But that is not how our labor market works. The “one-side up; the other side down” dynamics only occurred in Management, business, and financial operations occupations, Sales and related occupations and Transportation and material moving occupations. In Professional and related occupations, Service occupations and Production occupations unemployment went up even though employment increased. In Office and administrative support occupations and Installation, maintenance, and repair occupations both unemployment and employment declined. Unemployment in Farming, fishing, and forestry occupations went down while employment was unchanged. In Construction and extraction occupations unemployment jumped even though employment was essentially unchanged.
I'm not sure what to make of this. Nor would I want to make too much of two data points (Oct 2006 versus Oct 2007). But it does show the dynamics of the labor force is must more complicated -- and much more interesting -- then the services/manufacturing paradigm would indicate.
Time to change the paradigm?
Posted by Ken Jarboe at 09:45 AM | Comments (0) | TrackBack
November 01, 2007
New patent regs delayed
Early last month, I noted that the US Patent and Trademark Office (PTO) had proposed new rules on continuations – the ability to file unlimited amendments to a patent application. PTO claims these rules are need to reduce the backlog of applications and speed up the process. As I noted, these rules have been greeted with skepticism and opposition. Yesterday, a federal court for the Eastern District of Virginia granted the drug company GlaxoSmithKline an injunction blocking the rules.
As the Wall Street Journal summarized the arguments:
Critics of the existing system also note that many companies use continuations to delay introduction of a product, monitor market developments and then modify their patents to take advantage of emerging trends. On the flip side, opponents of the new rules said the rules were unclear, stifled innovation and would make it more expensive for small companies and individual inventors to patent their inventions.
One critic of the changes told me that the regulations essentially blame the customer of the PTO -- the applicant - for filing complicated materials in order to hide poor management. If applications have become more complex in recent years then better training and operational management is necessary.
The lead plaintiff is GlaxoSmithKline, but more are expected. As one commentator said, the “Eastern District will be awash in Amici.”
The case is not expected to be decided at this level until next year. And then there will likely be appeals. So stay tuned. This one has all the makings of a knock-down, drag-out fight.
Posted by Ken Jarboe at 08:51 AM | Comments (0) | TrackBack