<?xml version="1.0" encoding="utf-8"?>
<feed xmlns="http://www.w3.org/2005/Atom">
    <title>The Intangible Economy</title>
    <link rel="alternate" type="text/html" href="http://www.athenaalliance.org/weblog/" />
    <link rel="self" type="application/atom+xml" href="http://www.athenaalliance.org/weblog/atom.xml" />
    <id>tag:www.athenaalliance.org,2009-01-28:/weblog//1</id>
    <updated>2010-03-16T13:54:18Z</updated>
    <subtitle>Athena Alliance&apos;s weblog of insights and information
on the I-Cubed (Information, Innovation, Intangible) Economy</subtitle>
    <generator uri="http://www.sixapart.com/movabletype/">Movable Type Pro 4.24-en</generator>

<entry>
    <title>IP as trade retaliation heats up again -- US v Brazil</title>
    <link rel="alternate" type="text/html" href="http://www.athenaalliance.org/weblog/archives/2010/03/ip_as_trade_retaliation_heats_up_again_--_us_v_bra.html" />
    <id>tag:www.athenaalliance.org,2010:/weblog//1.3071</id>

    <published>2010-03-16T13:46:17Z</published>
    <updated>2010-03-16T13:54:18Z</updated>

    <summary>As I mentioned last September, the WTO ruling on US cotton subsidies allows Brazil to impose counter penalties on US trade. Those countermeasures could include penalties on services and intellectual property. Now Brazil has announced that is exactly what it...</summary>
    <author>
        <name>Ken Jarboe</name>
        <uri>www.athenaalliance.org</uri>
    </author>
    
    
    <content type="html" xml:lang="en" xml:base="http://www.athenaalliance.org/weblog/">
        <![CDATA[As <a href="http://www.athenaalliance.org/weblog/archives/2009/09/wto_allows_brazil_to_fine_us_-_wsjcom.html">I mentioned last September</a>, the WTO ruling on US cotton subsidies allows Brazil to impose counter penalties on US trade.  Those countermeasures could include penalties on services and intellectual property.  Now Brazil has announced that is exactly what it will do.  According to the Economist (<a href="http://www.economist.com/business-finance/displaystory.cfm?story_id=15656630">Brazil, America and trade: Picking a fight</a>): <blockquote>Brazil's government says that it intends to do this with measures later this month, to the value of $238m--the "remaining annual amount of retaliation to which Brazil is entitled"--which will be applied to intellectual property and services. 
</blockquote>Business Week (<a href="http://www.businessweek.com/news/2010-03-08/brazil-raises-tariffs-on-u-s-goods-to-break-patents-update2-.html">Brazil Raises Tariffs on U.S. Goods, to Break Patents</a>) adds:<blockquote>The government of President Luiz Inancio Lula da Silva plans to take additional steps and break U.S. patents as part of the $829 million retaliatory measures, [Brazilian Foreign Ministry official Carlos Marcio] Cosendey said. The ministry will publish a draft for public consultation of sanctions over intellectual property March 23, he said.
</blockquote>However, this may backfire.  As <a href="http://www.iam-magazine.com/blog/Detail.aspx?g=d6b65b26-3af4-4086-8a09-c4ac16148849">Joff Wild at the IAM Blog</a> asks:<blockquote>if I were a US IP owner I would also be asking myself whether I wanted to have anything to do with Brazil in the future. Why on earth would I want to invest in a country that is prepared to use IP as a political football in this way when there are other countries I can go to where I will not have this problem?
</blockquote>Brazil seems to understand the dangers here.  According to <a href="http://www.bloomberg.com/apps/news?pid=email_en&sid=aChFMhtm9G1s">a story in Bloomberg</a>:<blockquote>"These measures don't change policies or our commitment to protection of intellectual property," Carlos Marcio Cosendey, head of Foreign Ministry's economic department told reporters in Brasilia. "These are temporary measures aimed to force a change in the U.S."</blockquote>Given that the US seems to be in no hurry to change its cotton subsidies, that "temporary" measure may be around for a long time.  And other nations may be tempted to use the same tactic in the future.  It could get very interesting.]]>
        
    </content>
</entry>

<entry>
    <title>Manufacturing Innovations</title>
    <link rel="alternate" type="text/html" href="http://www.athenaalliance.org/weblog/archives/2010/03/sme_-_innovations_that_could_change_the_way_you_ma.html" />
    <id>tag:www.athenaalliance.org,2010:/weblog//1.3075</id>

    <published>2010-03-16T13:01:17Z</published>
    <updated>2010-03-16T13:29:16Z</updated>

    <summary>Who says manufacturing isn&apos;t innovative. Here is a list of Innovations That Could Change the Way You Manufacture from the Society of Manufacturing Engineers (SME): 2010 • Printed RFID Tags • Nanoporous Silicon Electrodes • High-Temperature, High-Power Microelectronics • Nanotube...</summary>
    <author>
        <name>Ken Jarboe</name>
        <uri>www.athenaalliance.org</uri>
    </author>
    
    
    <content type="html" xml:lang="en" xml:base="http://www.athenaalliance.org/weblog/">
        <![CDATA[Who says manufacturing isn't innovative.  Here is a list of <a href="http://www.sme.org/cgi-bin/getsmepg.pl?/html/technologies_change.htm&&SME&">Innovations That Could Change the Way You Manufacture</a> from the Society of Manufacturing Engineers (SME):<blockquote><br>
2010<br>
• 	Printed RFID Tags<br>
• 	Nanoporous Silicon Electrodes<br>
• 	High-Temperature, High-Power Microelectronics<br>
• 	Nanotube Inks<br>
• 	Nano Fibers<br>
• 	Self-Healing Agents<br>
• 	Phase-Changing Polymers<br>
• 	Bio-Based Products and Materials<br>
<br>
Innovations Watch<br>
• 	Small Gallium Nitride-Based Transistor<br>
• 	Quantum Dots<br>
• 	World's Smallest Radio -- Nano Radio<br>
• 	Dip-Pen Nanolithography<br>
• 	Method to Print Polymer X-Ray Sensing Panels<br>
<br>
2009<br>
• 	High-Speed Sintering<br>
• 	Buckypaper<br>
• 	Synthetic Gecko Tape<br>
• 	Micro-Laser-Assisted Machining<br>
• 	Wireless Power Transfer<br>
• 	Personal Fabrication<br>
<br>
Innovations Watch<br>
• 	Self-Healing Polymers<br>
• 	Liquid Lens Imaging<br>
• 	Foldable and Stretchable, Silicon Circuits<br>
<br>
2008<br>
• 	Direct Digital Manufacturing (DDM) Part 1 & Part 2<br>
• 	Ultracapacitors<br>
• 	Self-Assembling Nanotechnology<br>
• 	Intelligent Device Integration<br>
• 	Integrated 3-D Simulation and Modeling/Desktop Super Computers</blockquote>You can go on line to find out more about each -- and to nominate manufacturing innovations for the 2011 list.]]>
        
    </content>
</entry>

<entry>
    <title>Latest financial reform bill</title>
    <link rel="alternate" type="text/html" href="http://www.athenaalliance.org/weblog/archives/2010/03/latest_financial_reform_bill.html" />
    <id>tag:www.athenaalliance.org,2010:/weblog//1.3074</id>

    <published>2010-03-15T19:43:36Z</published>
    <updated>2010-03-16T15:02:14Z</updated>

    <summary>This morning Senate Banking Committee Chairman Chris Dodd introduced his long awaited financial reform legislation (see Dodd&apos;s statement, the summary, the full legislation, and stories in the Washington Post, the Wall Street Journal, and (two stories) the New York Times)....</summary>
    <author>
        <name>Ken Jarboe</name>
        <uri>www.athenaalliance.org</uri>
    </author>
    
    
    <content type="html" xml:lang="en" xml:base="http://www.athenaalliance.org/weblog/">
        <![CDATA[This morning Senate Banking Committee Chairman Chris Dodd introduced his long awaited financial reform legislation (see <a href="http://banking.senate.gov/public/index.cfm?FuseAction=Newsroom.PressReleases&ContentRecord_id=4dac6cf6-96f6-7474-6c15-f1308d5f7abf">Dodd's statement</a>, the <a href="http://banking.senate.gov/public/index.cfm?FuseAction=Issues.View&Issue_id=df4ed571-d028-1654-578c-931fd9e0de5b">summary</a>, the <a href="http://banking.senate.gov/public/index.cfm?FuseAction=Issues.View&Issue_id=630c2b4a-ef2a-9ff3-5e79-bbe3c26422da">full legislation</a>, and stories in the <a href="http://www.washingtonpost.com/wp-dyn/content/article/2010/03/14/AR2010031402675.html">Washington Post</a>, the <a href="http://online.wsj.com/article/SB10001424052748703909804575123783144041698.html">Wall Street Journal</a>, and (two stories) the <a href="http://www.nytimes.com/2010/03/15/business/15regulate.html">New York</a> <a href="http://www.nytimes.com/2010/03/16/business/16regulate.html">Times</a>).  There is a lot in the bill -- it creates a Consumer Financial Protection <strike>Agency</strike> Bureau, a<strike>n Agency for</strike> Financial Stability Oversight Council <strike>and a Financial Institutions Regulatory Administration (which replaces the Comptroller of the Currency and the Office of Thrift Supervisions and takes on certain functions of the Federal Reserve and the FDIC)</strike> and streamlines the authority of the Federal Reserve and the Comptroller of the Currency.  It also creates new regulations on credit rating agencies, corporate pay and governance, hedge funds, derivatives, insurance, investor protections, municipal securities, and securitizations.<br>
<br>
This last set of new regulations for securitization may have a direct impact on the monetization of intangible assets.  Ever since the melt down of the asset-backed securities (ABS) market, use of the securitization to monetize intangibles has essentially become a dead practice.  The proposed legislation requires issuers to hold <strike>10%</strike> 5% of the risk.  The legislation would also require the SEC to issue rules and regulations requiring a due diligence analysis of the assets underlying the asset-backed security and public disclosure of the results.<br>
<br>
The point of these changes is to increase investor trust in the ABS financial instruments.  Restoring trust in securitization should help restart the ABS market -- and that should also revive intangible-backed securitization.<br>
<br>
At least, that is how it should work in theory.  We will have to wait and see if a) any financial reform bill dealing with securitization actually makes it into law, and b) whether it is enough to convince investors to return to the ABS market and, specifically the intangible asset backed securities.
]]>
        
    </content>
</entry>

<entry>
    <title>New questions on intangibles in Kauffman firm survey</title>
    <link rel="alternate" type="text/html" href="http://www.athenaalliance.org/weblog/archives/2010/03/new_questions_in_kauffman_firm_survey.html" />
    <id>tag:www.athenaalliance.org,2010:/weblog//1.3073</id>

    <published>2010-03-15T15:52:54Z</published>
    <updated>2010-03-15T15:57:30Z</updated>

    <summary>One of the best sources of data on new start-ups is the Kauffman Foundation&apos;s Firm Survey, which is tracking 5000 companies that began operations in 2004. Each year, new questions are added to the survey. I&apos;m happy to say that...</summary>
    <author>
        <name>Ken Jarboe</name>
        <uri>www.athenaalliance.org</uri>
    </author>
    
    
    <content type="html" xml:lang="en" xml:base="http://www.athenaalliance.org/weblog/">
        <![CDATA[One of the best sources of data on new start-ups is the Kauffman Foundation's <a href="http://www.kauffman.org/research-and-policy/kauffman-firm-survey.aspx">Firm Survey</a>, which is tracking 5000 companies that began operations in 2004.  Each year, new questions are added to the survey.  I'm happy to say that the survey is fully cognizant of the importance of intangibles.  The 2009 survey specifically asked questions on the firms' investments in intangibles.  Data on the 2009 survey will be available in April but a preliminary discussion of survey was presented at the annual AEA meeting (<a href="http://www.athenaalliance.org/weblog/archives/2010/01/2010_aea_annual_meeting_papers.html">see earlier posting</a>):
<blockquote>The preliminary data shows that almost half of the new companies surveyed in the US invested in some form of intangible assets (almost 65% of "high-tech" companies). For US companies, the leading intangible asset was brand development, followed by investments in software or databases, worker training and then design of new and improved products and services. Organizational development investment was very low.</blockquote>Now comes word that the <a href="http://sites.kauffman.org/kfs/news_detail.cfm?news_id=371">2010 survey</a> will include more questions on intangible investments and innovation.  One set of questions will focus on what debt financing the firms use.  As part of that question, it will specifically ask whether companies used their intellectual property (patents, copyrights, trademarks) as collateral for loans.<br>
<br>
I am especially pleased to see this in the survey as it incorporates the suggested question I submitted to Kauffman late last year in response to their call for new questions.  In that submission I noted that a better understanding of how new businesses are financing their operations and expansion - specifically whether they are taking advantage of their intangible assets and intellectual property.  It is becoming somewhat more common that the borrower's IP is explicitly included in an asset-backed loan and that the value of these intangible assets are included in the loan analysis.  In a very few cases, the IP is specifically used as the major form of collateral for the loan.  However, collateral often takes the form of a blanket lien on all assets.  Intangibles and IP would implicitly be including in such a lien.  In this case, their value would not necessarily be recognized at the time of the loan or used to determine the conditions of the loan (i.e. the amount of collateral required and the loan-to-value ratio).<br>
<br>
It will be interesting to see the results of the survey -- especially if companies are explicitly aware that their intangibles might be part of their loan collateral.  That data will not be available for over a year, however.  In the meantime, I'm looking forward to more in-depth analysis of the 2009 data in investments in intangibles.
]]>
        
    </content>
</entry>

<entry>
    <title>January trade in intangibles - and revisions for 2009</title>
    <link rel="alternate" type="text/html" href="http://www.athenaalliance.org/weblog/archives/2010/03/january_trade_in_intangibles.html" />
    <id>tag:www.athenaalliance.org,2010:/weblog//1.3072</id>

    <published>2010-03-11T15:29:02Z</published>
    <updated>2010-03-11T15:31:37Z</updated>

    <summary>This morning&apos;s BEA trade data for January had some welcome news that the deficit declined slightly to $37.3 billion, down from the revised December level of $39.9 billion. Both imports and exports declined. That does not speak well for the...</summary>
    <author>
        <name>Ken Jarboe</name>
        <uri>www.athenaalliance.org</uri>
    </author>
    
    
    <content type="html" xml:lang="en" xml:base="http://www.athenaalliance.org/weblog/">
        <![CDATA[This morning's <a href="http://www.bea.gov/newsreleases/international/trade/2010/pdf/trad0110.pdf">BEA trade data for January</a> had some welcome news that the deficit declined slightly to $37.3 billion, down from the revised December level of $39.9 billion.  Both imports and exports declined.  That does not speak well for the health of the recovery.  The largest decreases in import were in automotive vehicles, capital goods, and consumer goods.  Oil imports also dropped dramatically.  According to the <a href="http://online.wsj.com/article/SB10001424052748703625304575115362856400040.html">Wall Street Journal</a>, economists had expected the deficit to rise to $41 billion.<br>
<br>
Our trade surplus in intangibles also improved in January, growing slightly to $12.3 billion. Unlike the overall trade flows, both exports and imports of intangibles increased, with exports rising slightly faster than imports.<br>
<br>
<span class="mt-enclosure mt-enclosure-image" style="display: inline;"><a href="http://www.athenaalliance.org/weblog/archives/assets_c/2010/03/Intangibles trade-Jan10-214.html" onclick="window.open('http://www.athenaalliance.org/weblog/archives/assets_c/2010/03/Intangibles trade-Jan10-214.html','popup','width=960,height=619,scrollbars=no,resizable=no,toolbar=no,directories=no,location=no,menubar=no,status=no,left=0,top=0'); return false"><img src="http://www.athenaalliance.org/weblog/archives/assets_c/2010/03/Intangibles trade-Jan10-thumb-580x373-214.gif" width="580" height="373" alt="Intangibles trade-Jan10.gif" class="mt-image-center" style="text-align: center; display: block; margin: 0 auto 20px;" /></a></span>

<span class="mt-enclosure mt-enclosure-image" style="display: inline;"><a href="http://www.athenaalliance.org/weblog/archives/assets_c/2010/03/Intangibles and goods-Jan10-218.html" onclick="window.open('http://www.athenaalliance.org/weblog/archives/assets_c/2010/03/Intangibles and goods-Jan10-218.html','popup','width=960,height=615,scrollbars=no,resizable=no,toolbar=no,directories=no,location=no,menubar=no,status=no,left=0,top=0'); return false"><img src="http://www.athenaalliance.org/weblog/archives/assets_c/2010/03/Intangibles and goods-Jan10-thumb-580x371-218.gif" width="580" height="371" alt="Intangibles and goods-Jan10.gif" class="mt-image-center" style="text-align: center; display: block; margin: 0 auto 20px;" /></a></span>

<span class="mt-enclosure mt-enclosure-image" style="display: inline;"><a href="http://www.athenaalliance.org/weblog/archives/assets_c/2010/03/Oil good intangibles-Jan10-221.html" onclick="window.open('http://www.athenaalliance.org/weblog/archives/assets_c/2010/03/Oil good intangibles-Jan10-221.html','popup','width=960,height=615,scrollbars=no,resizable=no,toolbar=no,directories=no,location=no,menubar=no,status=no,left=0,top=0'); return false"><img src="http://www.athenaalliance.org/weblog/archives/assets_c/2010/03/Oil good intangibles-Jan10-thumb-580x371-221.gif" width="580" height="371" alt="Oil good intangibles-Jan10.gif" class="mt-image-center" style="text-align: center; display: block; margin: 0 auto 20px;" /></a></span>

Our deficit in Advanced Technology Products also decreased in January, down to $3.3 billion from December's $4.9 billion.  The details reveal, however, that this is not necessarily due to good news.  The improvement was due to $2.7 billion drop in imports of information and communications technologies.  Exports of aerospace technologies and information and communications technologies declined substantially. And BEA and the Census Bureau note that exports were over stated by $558 million because of non-disclosure requirements. 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.<br>
<br>
<br>
The other news is that the 2009 data has been revised.  The new data shows higher levels of exports and lower levels of imports in the second half of the year.  As a result, the intangibles trade surplus for 2009 is $4 billion higher than previously reported.

<span class="mt-enclosure mt-enclosure-image" style="display: inline;"><a href="http://www.athenaalliance.org/weblog/archives/assets_c/2010/03/Intangibles trade-2009rev-224.html" onclick="window.open('http://www.athenaalliance.org/weblog/archives/assets_c/2010/03/Intangibles trade-2009rev-224.html','popup','width=960,height=615,scrollbars=no,resizable=no,toolbar=no,directories=no,location=no,menubar=no,status=no,left=0,top=0'); return false"><img src="http://www.athenaalliance.org/weblog/archives/assets_c/2010/03/Intangibles trade-2009rev-thumb-580x371-224.gif" width="580" height="371" alt="Intangibles trade-2009rev.gif" class="mt-image-center" style="text-align: center; display: block; margin: 0 auto 20px;" /></a></span>

<span class="mt-enclosure mt-enclosure-image" style="display: inline;"><a href="http://www.athenaalliance.org/weblog/archives/assets_c/2010/03/Intangibles trade-total 2009rev-227.html" onclick="window.open('http://www.athenaalliance.org/weblog/archives/assets_c/2010/03/Intangibles trade-total 2009rev-227.html','popup','width=960,height=615,scrollbars=no,resizable=no,toolbar=no,directories=no,location=no,menubar=no,status=no,left=0,top=0'); return false"><img src="http://www.athenaalliance.org/weblog/archives/assets_c/2010/03/Intangibles trade-total 2009rev-thumb-580x371-227.gif" width="580" height="371" alt="Intangibles trade-total 2009rev.gif" class="mt-image-center" style="text-align: center; display: block; margin: 0 auto 20px;" /></a></span>
<br>
<SPAN STYLE="line-height: 100%">
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:</SPAN>
<SPAN STYLE="line-height: 100%">
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.</SPAN>
<SPAN STYLE="line-height: 100%">
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.</SPAN>
<br>


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    </content>
</entry>

<entry>
    <title>Education&apos;s common core</title>
    <link rel="alternate" type="text/html" href="http://www.athenaalliance.org/weblog/archives/2010/03/educations_common_core.html" />
    <id>tag:www.athenaalliance.org,2010:/weblog//1.3068</id>

    <published>2010-03-10T16:02:09Z</published>
    <updated>2010-03-10T16:35:33Z</updated>

    <summary>This morning the National Governors Association Center for Best Practices and Council of Chief State School Officers released their draft K-12 Common Core State Standards for comment. The standards are the latest attempt to set some form of national standards,...</summary>
    <author>
        <name>Ken Jarboe</name>
        <uri>www.athenaalliance.org</uri>
    </author>
    
    
    <content type="html" xml:lang="en" xml:base="http://www.athenaalliance.org/weblog/">
        <![CDATA[This morning the National Governors Association Center for Best Practices and Council of Chief State School Officers released their draft <a href="http://www.corestandards.org/">K-12 Common Core State Standards</a> for comment.  The standards are the latest attempt to set some form of national standards, in this case in English-language arts and mathematics.  According to the groups announcement:
<blockquote>These standards define the knowledge and skills students should have within their K-12 education careers so that they will graduate high school able to succeed in entry-level, credit-bearing academic college courses and in workforce training programs. The standards are:
<ul>
	<li>Aligned with college and work expectations;</li>
	<li>Clear, understandable and consistent;</li>
	<li>Include rigorous content and application of knowledge through high-order skills;</li>
	<li>Build upon strengths and lessons of current state standards;</li>
	<li>Informed by other top performing countries, so that all students are prepared to succeed in our global economy and society; and</li>
	<li>Evidence-based.</li>
</ul></blockquote>These common standards seem to me to be a step forward in boosting effective investments in one of our most important intangible assets: education.  I have somewhat wary of the standardized test approach to education.  It seem that approach is more suited to the old industrial era than the current information age.  People have different learning styles and different forms of "intelligence" that can be hard to capture in standardized test.  However, a common core of expectations of the foundational skills that children should have seems to me to be an important starting point.<br>
<br>
For example, I support efforts to improve STEM (science, technology, engineering, math) education -- not because I think we should try to make everyone into a techie (that would be a disaster on so many levels).  I support STEM because math and science are foundational skills needed for many activities -- including critical thinking and deductive reasoning.<br>
<br>
In my quick look at the materials, I did find one slightly amusing note.  The reading standards for kindergartners includes the following:
<blockquote>1. Demonstrate understanding of the organization and basic features of print.
<blockquote>a. Identify the front cover, back cover, and title page of a book.<br>
b. Follow words from left to right, top to bottom, and page by page.<br>
c. Understand that words are separated by spaces in print.<br>
d. Recognize and name all upper- and lowercase letters of the alphabet.<br>
</blockquote></blockquote>I wonder in a future electronic print world if the ability to recognize the front cover of a book will be a foundational skill.<br>
<br>
The draft standards are out for comment until April 2.
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    </content>
</entry>

<entry>
    <title>Productivity and Job Growth</title>
    <link rel="alternate" type="text/html" href="http://www.athenaalliance.org/weblog/archives/2010/03/productivity_surge_may_hurt_job_growth_fed_paper_s.html" />
    <id>tag:www.athenaalliance.org,2010:/weblog//1.3064</id>

    <published>2010-03-09T14:38:11Z</published>
    <updated>2010-03-09T14:47:20Z</updated>

    <summary>As noted in my previous posting, productivity growth is the key to sustainable long term economic growth. But the productivity data needs to be looked at with a careful eye. And not all productivity growth in the short run helps...</summary>
    <author>
        <name>Ken Jarboe</name>
        <uri>www.athenaalliance.org</uri>
    </author>
    
    
    <content type="html" xml:lang="en" xml:base="http://www.athenaalliance.org/weblog/">
        <![CDATA[As noted in <a href="http://www.athenaalliance.org/weblog/archives/2010/03/deficits_growth_and_intangibles.html">my previous posting</a>, productivity growth is the key to sustainable long term economic growth.  But the productivity data needs to be looked at with a careful eye.  And not all productivity growth in the short run helps with other economic issues, such as employment.  The Wall Street Journal's Real Time Economics blog raised this point yesterday in a posting <a href="http://blogs.wsj.com/economics/2010/03/08/productivity-surge-may-hurt-job-growth-fed-paper-says">"Productivity Surge May Hurt Job Growth, Fed Paper Says"</a>.  The posting describes a study by two San Francisco Fed economists Mary Daly and Bart Hobijn on <a href="http://www.frbsf.org/publications/economics/letter/2010/el2010-07.html"><em>Okun's Law and the Unemployment Surprise of 2009</em></a>.  The study found that:<blockquote>In 2009, strong growth in productivity allowed firms to lay off large numbers of workers while holding output relatively steady. This behavior threw a wrench into the long-standing relationship between changes in GDP and changes in the unemployment rate, known as Okun's law. If Okun's law had held in 2009, the unemployment rate would have risen by about half as much as it did over the course of the year.</blockquote>
So, productivity is bad for employment - right?  Not necessarily.  It is not uncommon for productivity to rise in a downturn.  Remember that productivity is a measure of output per unit input.  In times of growth, productivity measures how much additional output is generated per input.  In a recession, companies frequently shed the least productive inputs first while trying to at least hold output steady.  If inputs shrink faster than outputs, productivity rises.  As the paper notes:<blockquote>Some of the surge in productivity growth in 2009 was likely due to such cyclical factors as layoffs of least productive workers, greater intensity of work effort, and shifts away from producing intangible capital, which is not measured in output statistics.</blockquote>Thus, the short term productivity increase may have little to do with increased investments in knowledge, technology, business processes, and other intangibles.  Those investments still need to be made if, from a long run perspective, will want to see productivity increases creating growth and employment.<br>
<br>
But, as the paper warns, "Anecdotal evidence suggests that efforts to contain costs and remain nimble in the face of uncertainty have become a fixture in business strategy."  As a result, the link between GDP growth and employment is not as strong as it was.  This result is also evident in the decade long stagnation of wages and the pattern of "jobless" recoveries.  In every recession in the past few decades has resulted in structural adjustments, not just cyclical changes.  Workers are not on temporary layoff subject to recall--jobs are permanently eliminated. <br>
<br>
Such a shift in economic structure and business strategy is part-and-parcel of the shift to the I-Cubed Economy.  It is one that we need to build new labor policy mechanisms to address.  
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    </content>
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<entry>
    <title>Deficits, growth and intangibles</title>
    <link rel="alternate" type="text/html" href="http://www.athenaalliance.org/weblog/archives/2010/03/deficits_growth_and_intangibles.html" />
    <id>tag:www.athenaalliance.org,2010:/weblog//1.3063</id>

    <published>2010-03-08T17:37:23Z</published>
    <updated>2010-03-08T18:02:09Z</updated>

    <summary>Over at Forbes, Bruce Bartlett has an cogent discussion of the federal deficit and debt (How Much Does The National Debt Matter?). In the piece, he talks about whether we can grow our away out of deficit. He is rather...</summary>
    <author>
        <name>Ken Jarboe</name>
        <uri>www.athenaalliance.org</uri>
    </author>
    
    
    <content type="html" xml:lang="en" xml:base="http://www.athenaalliance.org/weblog/">
        <![CDATA[Over at Forbes, Bruce Bartlett has an cogent discussion of the federal deficit and debt (<a href="http://www.forbes.com/2010/03/04/consumer-debt-deficit-budget-opinions-columnists-bruce-bartlett.html">How Much Does The National Debt Matter?</a>).  In the piece, he talks about whether we can grow our away out of deficit.  He is rather pessimistic about that idea--arguing that productivity growth cannot be large enough.  He is especially hard on those who argue we need to cut taxes to spur growth:
<blockquote>it's highly unlikely that further tax cuts will do much to increase growth when they will add to the deficit and taxes are already at their lowest level as a share of GDP in almost 60 years--more than 3% of GDP below the postwar average. In any case, the biggest problem businesses have today is a lack of customers, not high taxes.
</blockquote>He goes on to note:
<blockquote>Recently some foolish bloggers have suggested that it would be better to default on the debt than raise taxes. That would, of course, cause tremendous hardship for millions of Americans because some $800 billion in Treasury securities are owned by private investors, almost $700 billion are owned by mutual funds, more than $500 billion are owned by state and local governments and more than $300 billion are owned by pension funds, among others. I tend to think that they won't take too kindly to the idea that raising taxes would be worse than paying them the money they are owed. In the end the debt must be paid, and we will have to raise taxes and cut spending to make sure it is.</blockquote>I don't often agree with Bartlett, but I think he is probably right about how we are going to get ourselves out of this situation. The fact that some folks are actually talking about default shows the depth of the lack of understanding--and frankly scares me silly.<br>
<br>I would argue, however, that he may be too pessimistic about productivity.  As the recent <a href="http://www.whitehouse.gov/administration/eop/cea/economic-report-of-the-President">Economic Report of the President</a> notes we have had strong growth in productivity--with some recent problems:
<blockquote>From 1996:Q1 to the last available observation (2009:Q3), it averaged 2.7 percent per year, almost equal to its rate over the immediate postwar period. But that rapid growth was concentrated in the first part of the period. In the first eight years (1996:Q1 to 2003:Q4), productivity growth averaged 3.3 percent; in the four years before the business cycle peak (2004:Q1 to 2007:Q4), it averaged only 1.7 percent.</blockquote> 
We need to get back to the 3.3% (or even the 2.7%) rate. I do agree that across the board tax cuts are not the solution to the productivity question. Investment in intangibles is.<br>
<br>Unfortunately, such investments often take a long time to pay off.  And it is easier to take the short run fix. An example of this is illustrated in a recent story in the Wall Street Journal <a href="http://online.wsj.com/article/SB10001424052748704869304575104124088312524.html">Schools' New Math: the Four-Day Week</a>. The story notes that kids still have the same number of classroom hours, in a compressed week. And it is unclear whether a four day week has any impact on learning, especially if the fifth day is supplemented by additional tutoring. But the mere idea of cutting back on investments in education runs counter to the direction we need to go to restore productivity growth.<br>
<br>
As we confront the deficit issue, let us how we are not "penny-wise and pound-foolish."  But if that was not the normal human response, we wouldn't have such clichés in the first place. Not a comforting thought.
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    </content>
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<entry>
    <title>February employment</title>
    <link rel="alternate" type="text/html" href="http://www.athenaalliance.org/weblog/archives/2010/03/february_employment.html" />
    <id>tag:www.athenaalliance.org,2010:/weblog//1.3062</id>

    <published>2010-03-05T15:59:11Z</published>
    <updated>2010-03-06T00:18:24Z</updated>

    <summary>This morning&apos;s BLS employment data was much better than feared. The unemployment rate stayed steady at 9.7% and the economy lost &quot;only&quot; 36,000 jobs. According to Wall Street Journal estimates, economist &quot;were expecting payrolls to fall by 75,000 mainly because...</summary>
    <author>
        <name>Ken Jarboe</name>
        <uri>www.athenaalliance.org</uri>
    </author>
    
    
    <content type="html" xml:lang="en" xml:base="http://www.athenaalliance.org/weblog/">
        <![CDATA[This morning's <a href="http://www.bls.gov/news.release/empsit.nr0.htm">BLS employment data</a> was much better than feared.  The unemployment rate stayed steady at 9.7% and the economy lost "only" 36,000 jobs.  According to <a href="http://online.wsj.com/article/SB10001424052748703915204575103172403936754.html">Wall Street Journal estimates</a>, economist "were expecting payrolls to fall by 75,000 mainly because of the severe weather."<br>
<br>
However, number of involuntary underemployed (part time for economic reasons) and those part time because of slack work both increased dramatically in February.  Not a good sign.  But, as I've said before, let's not read too much into one month's data -- especially a month with two major snow storms.<br>
<br>
<center>Involuntary Underemployed</center><span class="mt-enclosure mt-enclosure-image" style="display: inline;"><a href="http://www.athenaalliance.org/weblog/archives/assets_c/2010/03/Involuntaryunderemployed-0210-206.html" onclick="window.open('http://www.athenaalliance.org/weblog/archives/assets_c/2010/03/Involuntaryunderemployed-0210-206.html','popup','width=960,height=614,scrollbars=no,resizable=no,toolbar=no,directories=no,location=no,menubar=no,status=no,left=0,top=0'); return false"><img src="http://www.athenaalliance.org/weblog/archives/assets_c/2010/03/Involuntaryunderemployed-0210-thumb-580x370-206.gif" width="580" height="370" alt="Involuntaryunderemployed-0210.gif" class="mt-image-center" style="text-align: center; display: block; margin: 0 auto 20px;" /></a></span>]]>
        
    </content>
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<entry>
    <title>Toyota&apos;s &quot;Books of Knowledge&quot;</title>
    <link rel="alternate" type="text/html" href="http://www.athenaalliance.org/weblog/archives/2010/03/toyotas_books_of_knowledge.html" />
    <id>tag:www.athenaalliance.org,2010:/weblog//1.3059</id>

    <published>2010-03-03T15:33:50Z</published>
    <updated>2010-03-03T16:04:31Z</updated>

    <summary>By now everyone has heard of Toyota&apos;s problems -- with both their cars and their reputation. The company&apos;s problems have only gotten worse. The Chairman of the House Oversight and Government Reform Committee is raising concerns that the company may...</summary>
    <author>
        <name>Ken Jarboe</name>
        <uri>www.athenaalliance.org</uri>
    </author>
    
    
    <content type="html" xml:lang="en" xml:base="http://www.athenaalliance.org/weblog/">
        <![CDATA[By now everyone has heard of Toyota's problems -- with both their cars and their reputation.  The company's problems have only gotten worse.  The <a href="http://oversight.house.gov/index.php?option=com_content&task=view&id=4800&Itemid=49">Chairman of the House Oversight and Government Reform Committee is raising concerns</a> that the company may have deliberately withheld information required to be disclosed as part of previous lawsuits.  Chairman Ed Towns has given Toyota until March 12 to respond.<br>
<br>
But, one of the main whistleblowers, former Toyota lawyer Dimitrios Biller, seems to be claiming that the information is more than just some data on crashes and lawsuits.  Those claims apparently are in the documents subpoenaed by the Committee.  As <a href="http://www.washingtonpost.com/wp-dyn/content/article/2010/02/26/AR2010022605619.html">an article in the Washington Post</a> explains:<blockquote>The documents include Biller's recounting of a 2006 arbitration case against Toyota involving a vehicle rollover that left the driver paralyzed. Toyota was willing to pay a premium settlement to prevent the plaintiff's lawyers from getting access to Toyota's Books of Knowledge, which, Biller writes, "contain highly sensitive information that rises to the level of trade secrets and highly confidential information."<br>
In the documents, Biller explains: "The Books of Knowledge contain information on how to design vehicles and component parts (including safety systems like seat belts, side curtain airbags). The information does not relate to any one particular vehicle; the information relates to all vehicles. <em>The information is essentially design principles and philosophies that serve the foundation for how Toyota designs its vehicles.</em>" (emphasis added)</blockquote>Toyota has long been known as a company heavy on intangible capital.  The famous Toyota production system -- including its relationship with its suppliers -- is credited with making the company the world leader.  If the "Books of Knowledge" are really as comprehensive as Biller claims, they would be the repository of much of that intangible capital.  And one can understand the company's reluctance to make that information public.  If the information can be claimed as trade secrets, the company may be able to avoid some disclosure.  But so far, the company has played the management of these intangibles badly.<br>
<br>
It will be interesting to see how they respond to Chairman Towns' request.
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    </content>
</entry>

<entry>
    <title>Can banks step in and finish R&amp;D?</title>
    <link rel="alternate" type="text/html" href="http://www.athenaalliance.org/weblog/archives/2010/03/builders_get_work--if_not_loans--from_banks_-_wsjc.html" />
    <id>tag:www.athenaalliance.org,2010:/weblog//1.3056</id>

    <published>2010-03-02T16:24:54Z</published>
    <updated>2010-03-02T16:37:01Z</updated>

    <summary>There was an interesting article in the Wall Street Journal yesterday on how some banks are coping with the foreclosure problem (As Loans Dry Up, Builders Work for Banks). According to the article, some banks are hiring construction companies to...</summary>
    <author>
        <name>Ken Jarboe</name>
        <uri>www.athenaalliance.org</uri>
    </author>
    
    
    <content type="html" xml:lang="en" xml:base="http://www.athenaalliance.org/weblog/">
        <![CDATA[There was an interesting article in the Wall Street Journal yesterday on how some banks are coping with the foreclosure problem (<a href="http://online.wsj.com/article/SB10001424052748703494404575082141756140602.html">As Loans Dry Up, Builders Work for Banks</a>).  According to the article, some banks are hiring construction companies to complete building projects which the banks have taken over.  The arrangement benefits both parties.  While the contractor doesn't get any profits from the houses as they would have if it was their own project, they do earn a flat fee and can keep their crews employed.  The banks realize a higher recovery rate on the defaulted loans as the properties are more valuable as competed houses rather than as half-built structures or as vacant land.<br><br>
Might not this be a model for companies in R&D as well?  As I <a href="http://www.athenaalliance.org/weblog/archives/2010/01/operational_importance_of_ip_as_collateral.html">noted earlier</a>, already the US Department of Energy (DOE) urges companies to sign over IP as collateral as part of its clean energy production loans so that DOE can step in and finish the project in case of default.  Might not there be a role of for a research company to be paid to finish the project development  - so that the bank can reap more value than simply auctioning off the IP?<br><br>
There might be a somewhat similar model already out there.  In our report, <a href="http://www.athenaalliance.org/apapers/MaximizingIntellectualPropertyandIntangibleAssets.htm"><em>Maximizing Intellectual Property and Intangible Assets: Case Studies in Intangible Asset Finance</em></a>, we mentioned that Deutsche Bank is currently managing IP funds with the goal of further refining the commercial potential of the technologies so that they can be sold and/or licensed in the future.  While this is not exactly the same, it does provide a possible pathway for banks to take to realize higher value on IP that ends up under their control.<br><br>I know this would be a stretch for most banks.  It is one thing for a bank to take control of a building project -- something that they understand.  And even it that case, it seems that this model is being used by those financial institutes which specialize in real estate, such as the case of Housing Capital Co. cited in the article.  But surely there are some IP savvy lenders out there who might want to explore the idea.
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    </content>
</entry>

<entry>
    <title>4Q GDP revised -- upwards</title>
    <link rel="alternate" type="text/html" href="http://www.athenaalliance.org/weblog/archives/2010/02/4q_gdp_revised_--_upwards.html" />
    <id>tag:www.athenaalliance.org,2010:/weblog//1.3054</id>

    <published>2010-02-26T16:01:29Z</published>
    <updated>2010-02-26T16:14:13Z</updated>

    <summary>As I anticipated in an earlier posting, today the BEA revised its estimate of 4Q GDP. What I got completely wrong was the direction -- my bad. GDP grew by 5.9% -- revised upward from the earlier estimate of 5.7%....</summary>
    <author>
        <name>Ken Jarboe</name>
        <uri>www.athenaalliance.org</uri>
    </author>
    
    
    <content type="html" xml:lang="en" xml:base="http://www.athenaalliance.org/weblog/">
        <![CDATA[As I anticipated in an <a href="http://www.athenaalliance.org/weblog/archives/2010/01/4q_gdp.html">earlier posting</a>, today the <a href="http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm">BEA revised its estimate of 4Q GDP</a>.  What I got completely wrong was the direction -- my bad.  GDP grew by 5.9% -- revised upward from the earlier estimate of 5.7%.  I had thought the number would have been revised downward because of the <a href="http://www.athenaalliance.org/weblog/archives/2010/02/december_trade_in_intangibles_--_and_2009.html">worse than expected trade data</a>.  As it turned out, upward revisions in private inventory investment and nonresidential fixed investment were more than enough to overcome any downward revision due to the increased trade deficit and the lower than expected consumer spending.<br>
<br>
So, I take it back -- the economy really was doing well in the 4th quarter of last year.  Let's see if we can sustain that growth and if we see an improvement in the employment numbers.<br>
<br>
By the way, I will make another prediction:  don't read too much in to next week's employment data.  The survey was taken in the middle of the snow storms which may skew the data.]]>
        
    </content>
</entry>

<entry>
    <title>The importance of manufacturing nearby</title>
    <link rel="alternate" type="text/html" href="http://www.athenaalliance.org/weblog/archives/2010/02/the_importance_of_manufacturing_nearby.html" />
    <id>tag:www.athenaalliance.org,2010:/weblog//1.3053</id>

    <published>2010-02-25T13:49:23Z</published>
    <updated>2010-02-25T14:04:39Z</updated>

    <summary>A story in today&apos;s Wall Street Journal (In Italy&apos;s Mills, a New Spin) on the fashion industry highlights the role of manufacturing in an intangible-intensive, innovation-driven economy.&quot;If we lose the Italian mills, we lose the creativity needed for fashion,&quot; says...</summary>
    <author>
        <name>Ken Jarboe</name>
        <uri>www.athenaalliance.org</uri>
    </author>
    
    
    <content type="html" xml:lang="en" xml:base="http://www.athenaalliance.org/weblog/">
        <![CDATA[A story in today's Wall Street Journal (<a href="http://online.wsj.com/article/SB10001424052748704240004575085502462249586.html">In Italy's Mills, a New Spin</a>) on the fashion industry highlights the role of manufacturing in an intangible-intensive, innovation-driven economy.<blockquote>"If we lose the Italian mills, we lose the creativity needed for fashion," says Sal Giardina, an adjunct professor of textiles at New York's Fashion Institute of Technology. "Fabrics are the common denominator of fashion. From birth to death, we are never more than three feet away from a textile product."</blockquote>Much has been said about this high value-added strategy.  As I have <a href="http://www.athenaalliance.org/weblog/archives/2010/02/manufacturing_framework_and_ic.html">noted before</a>, manufacturing is an intellectual capital dependent activity. A key part of that IC is the supply-chain relationship. The need to have production and design closely linked is something that a number of technology industries re-learn every few years. As the article illustrates, it is important in any industry with short product life cycles -- such as fashion.<br>
<br>
The article also points outs the countervailing forces:<blockquote>Yet consumers have been demanding cheaper clothes, and one way retailers have achieved these improvements is by pressuring apparel manufacturers to lower prices by more than 20% for each of the past two seasons. Many have done so by moving more production to China, Sri Lanka, Thailand and other low-labor-cost regions of the world. </blockquote>How these two forces play out will determine the fate of many industries -- and the fate of many national economies.]]>
        
    </content>
</entry>

<entry>
    <title>Worth reading</title>
    <link rel="alternate" type="text/html" href="http://www.athenaalliance.org/weblog/archives/2010/02/worth_reading.html" />
    <id>tag:www.athenaalliance.org,2010:/weblog//1.3052</id>

    <published>2010-02-25T12:54:26Z</published>
    <updated>2010-02-25T13:43:42Z</updated>

    <summary>Here is a quick take on three interrelated items worth reading: Greg Tassey&apos;s paper Rationales and mechanisms for revitalizing US manufacturing R&amp;D strategies outlines the importance of manufacturing to a technology-based economy and a new economic framework for policy. The...</summary>
    <author>
        <name>Ken Jarboe</name>
        <uri>www.athenaalliance.org</uri>
    </author>
    
    
    <content type="html" xml:lang="en" xml:base="http://www.athenaalliance.org/weblog/">
        <![CDATA[Here is a quick take on three interrelated items worth reading:<br>
<br>
Greg Tassey's paper <a href="http://www.nist.gov/director/planning/manufacturing_strategy_paper.pdf"><em>Rationales and mechanisms for revitalizing US
manufacturing R&D strategies</em></a> outlines the importance of manufacturing to a technology-based economy and a new economic framework for policy.<br>
<br>
<a href="http://www.scienceprogress.org/2009/09/the-geography-of-innovation/"><em>The Geography of Innovation</em></a> describes the role of regional innovation clusters and how to promote them.<br>
<br>
<a href="http://www.aurp.net/more/AURPPowerofPlace2.pdf"><em>The Power of Place 2.0</em></a> summarizes 10 policy ideas for "creating jobs, improving technology commercialization, and building communities of innovation."<br>
<br>
All three are built on the central concept that innovation and intangibles (including knowledge) drive economic growth -- the concept that also is at the core of Athena Alliance and our notion of the I-Cubed Economy.
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    </content>
</entry>

<entry>
    <title>Science-based businesses as organizational models</title>
    <link rel="alternate" type="text/html" href="http://www.athenaalliance.org/weblog/archives/2010/02/the_evolution_of_science-based_business_innovating.html" />
    <id>tag:www.athenaalliance.org,2010:/weblog//1.3049</id>

    <published>2010-02-23T15:20:54Z</published>
    <updated>2010-02-23T15:39:50Z</updated>

    <summary>Gary Pisano of the Harvard Business School has a new working paper on The Evolution of Science-Based Business: Innovating How We Innovate. First of all, Pisano differentiates between technology-based and science-based businesses. Technology-based businesses, like software and electronics, develop and...</summary>
    <author>
        <name>Ken Jarboe</name>
        <uri>www.athenaalliance.org</uri>
    </author>
    
    
    <content type="html" xml:lang="en" xml:base="http://www.athenaalliance.org/weblog/">
        <![CDATA[Gary Pisano of the Harvard Business School has a  new working paper on 
<a href="http://hbswk.hbs.edu/item/6365.html">The Evolution of Science-Based Business: Innovating How We Innovate</a>.  First of all, Pisano differentiates between technology-based and science-based businesses.  Technology-based businesses, like software and electronics, develop and apply existing science.  Science-based businesses, such as biotech, must engage in developing new science.  That difference makes science-based businesses far more risky - since the science may or may not pan out:<br><br><blockquote>Science‐based businesses are at the frontier of knowledge. Technical failure is the norm, not the exception. What is known pales in comparison to what remains to be discovered.<br><br>
. . .<br><br>
Thus, not only might the financial costs of exploration be high, but critical technical uncertainties may not be easily or quickly resolvable early in the development process. And, even if an organization can resolve those uncertainties through research, there is no guarantee the resulting intellectual property will be appropriable. "Deeper understanding" may be critical to further development, but it is generally not patentable. </blockquote>

That fact of "science" limits how such science-based businesses can raise capital. After discussing the limits of venture capital and capital markets, he offers this discussion of IP monetization:<br><br><blockquote>An alternative or complementary strategy for a firm to raise capital for its R&D is to "monetize" its intellectual property. That is, rather than trying to develop a whole product and earning revenues on product sales, the company essentially licenses out the project to another firm. Such licensing has become a huge part of the R&D world in most technology intensive industries. There are literally thousands of R&D agreements and licensing deals that occur every year. One of the chief benefits of intellectual property monetization is that it enables firms to manage risks. It also enables firms with complementary capabilities to access know‐how.<br><br>
Monetization of intellectual property is not a new phenomenon. Firms have licensed intellectual property for more than a century. However, the extent of this IP monetization appears to have grown dramatically in the last few decades. Since science‐based businesses rest on intellectual capital, it stands to reason that markets for know‐how will play an ever more important role in the future. However, we must also understand that monetization of IP has limits as a device for creating the required integration.<br><br>
Market mechanisms work best when the relevant "modules" of knowledge are clearly defined. Thus, modularity facilitates collaboration (Teece 1982). This is one reason Open Source projects like Linux have been so successful. The modular architecture of Linux enables thousands of software developers from around the world to make contributions without ever having to talk to each other directly or to meet face to face. The IP monetization approach is often predicated on an assumption that the IP in question is a discrete module or asset that can be bought and sold. However, as mentioned earlier, in science‐based contexts, the immaturity of the underlying knowledge base makes it less likely for modularity to exist. This suggests that achieving the required integration through licensing and the market for‐ know will fall short in science‐based contexts.</blockquote>
I'm not sure he has completely grasped the role of IP monetization. In some industries, such as electronics, the licensing process is one of integrating modules. But in biotech, the process seems to have two other roles: division of labor and capital formation. The division of labor function of licensing spreads the work among several organizations, specifically between the new drug development and approval process and the production and marketing processes. Licensing (and sale) of biotech IP also functions in the timeless manner of swapping long term revenues for upfront capital. Licensing and other forms of IP monetization use the revenues from the previous science-based success to fund the next scientific gamble. Thus, it may be perfectly suited to the high risk nature of these types of businesses.<br>
<br>
Ultimately Pisano argues that these science-based endeavors require new organizational models -- based on a view from Alfred Chandler that "it is hard to think about technological innovation as anything but tightly intertwined with organizational and institutional innovation." As he notes:<br><br><blockquote>Science‐based businesses in biotech and elsewhere have 'borrowed' many elements of organizational technology (venture capital financing, use of the public equity markets for liquidity, monetization of intellectual property, etc.) that have been used, often successfully, in other technology contexts such as electronics and software. However, as argued above, science‐based sectors create novel organizational challenges around the simultaneous need to manage risk, integrate cross knowledge bases, and leverage cumulative learning. Addressing these challenges calls for new "organizational technology." </blockquote>
Here I would completely agree. But I would not limit the observation to only science-based businesses. Most innovation-based businesses (whether new science-based, based on existing science, or non-technological) face the same three challenges of risk, multiple knowledge bases, and learning. We can look to science-based businesses for clues to the emerging organizational models. But those models, I would argue, will end up being widely applicable in the I-Cubed Economy.
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    </content>
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