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Sunday, August 5, 2012
Where Have All the Jobs Gone? Blame ICT.

A story two days ago in The New York Times contained two startling sentences. 

The economy now produces more goods and services than it did before the downturn officially began in December 2007. But it does so with almost five million fewer jobs.

While this is a specifically American trend, it is one that has – or should have – policymakers in every industrialized and emerging market country worried.  It is called "job polarization," or what two economists, in a study of Britain, called the rise of "lousy and lovely" jobs:

Thanks to technology, more and more ‘routine’ tasks can be done by machines. The most familiar example is the increasing automation of manufacturing. But machines can now do ‘routine’ white-collar jobs, too — things like the work that used to be performed by travel agents and much of the legal ‘discovery’ that was done by relatively well-paid associates with expensive law degrees.
    The jobs that are left are the ‘lovely’ ones, at the top of the income distribution — white-collar jobs that cannot be done by machines, like designing computer software or structuring complex financial transactions. A lot of ‘lousy’ jobs are not affected by the technology revolution, either — nonroutine, manual tasks like collecting the garbage or peeling and chopping onions in a restaurant kitchen. 

What makes it possible to automate more of those middle-skill jobs every year?  Three little letters: ICT or information and communications technology.  

A previous generation of factory workers was reduced in ranks by manufacturing automation and robotics.  Today, ICT shifts the target to many categories of middle-skilled knowledge workers: bank tellers, secretaries, data entry clerks, call center operators, paralegals and bookkeepers.  As ICT-based applications become cheaper and more powerful, people working in these jobs can no longer deliver enough value to the enterprise to justify the cost of their salary, benefits, training and physical support.  Even people on their way to becoming high-priced knowledge workers are affected.  In the US in 2012, only 55% of law school graduates could expect to find work in the law, because automation has eliminated much of the grunt work where young attorneys cut their teeth.       

It is probably too soon to write off the young lawyers, however, because ICT gives serious economic advantage to those with the skills to use it to increase the value of their work to the employer.  A study from the London School of Economics, based on data from Europe Japan and the US, found that the industries that were the fastest adopters of ICT also saw the fastest growth in demand for the most educated workers and the sharpest declines in demand for people with intermediate levels of education.   

Today's global markets are the child of ICT, which makes it possible to manage, operate and market effectively worldwide.  And companies and individuals that are capable of selling across global markets can reap such rewards as the world has never seen.  Actor Tom Cruise made $75 million in just one year ending May 2012 from running, jumping, punching and glowering in front of a camera.   J.K. Rowlings, who had to live in her car before the publication of the first Harry Potter novel, is the first author in history to earn a billion dollars from her work.    

Put all of this together, and you have a recipe for major social and political strains, as the divide widens between people at the top and bottom of the economic pyramid, and technology change erodes the livelihoods of those in the middle.  Concerns about job polarization have gone viral – a Google search will yield about 3 million hits. Hardly the 37 million that a search for the Eurovision song contest produces, but still impressive for a wonky topic.   

How big a problem is this, really?  What – aside from that iPad on which you are reading this blog – is the underlying cause?  Most importantly, what can any of us do about it?  ICF has just published a white paper called Innovation and Employment in the Intelligent Community.  It answers these questions and offers inspiring examples from our Top Seven Intelligent Communities around the world to guide communities applying for our Intelligent Community Awards.  In these polarizing times, they are finding ways to make sure their citizens and employers are on the winning side of an inescapable trend.

Monday, July 16, 2012
The Man Who Discovered the Value of Innovation
Innovation is one of ICF’s five Intelligent Community Indicators, our framework for developing inclusive prosperity at the local level in the 21st Century.   It is also the theme of the 2013 Intelligent Community Awards, which opened for nominations last week.  On July 23, we will publish a white paper on Innovation and Employment to help communities how to take advantage of the surprisingly complex relationship between the two.  

While working on that white paper, I stumbled on an interesting question.   Everybody accepts today that innovation is the thing that drives our economy.  But how do we know?  Seriously.  Where did the idea come from and how do we know it’s true?  

The story takes us back to the 1950s.  A Stanford University professor named Moses Abramovitz decided to test economic theory on some real-world data.  He set out to track the growth in the total output of the American economy from 1870 to 1950, and to analyze what caused it.  It was a mighty undertaking in those days of paper records and mechanical calculators, but he got it done.  

Economic theory of the time said that there are two kinds of inputs to the economy: capital and labor.  Capital is the money invested by businesses, institutions and government.  Labor is the people they employ.  You invest a few million dollars or Euros or pounds in a factory and raw materials.  You hire hundreds of workers to staff it.  Out of the factory come products and out of the economy comes growth.     

Abramovitz assembled his data and was able to produce figures for the total output of the economy between those years.  Then he measured the growth in the total amount of money being invested and the total workforce over the same period.  

Professor Abramovitz then made what he thought were reasonable assumptions about how the much this growth in capital and labor inputs should add to the output of the economy.  Growth in A plus growth in B equals growth in C.  Simple , right?    

Not so much.  It turned out that the growth of inputs between 1870 and 1950 could only account for about 15% of the actual growth in economic output .  Eighty-five percent of the growth was coming from some X-Factor and neither Professor Abramovitz or anybody else could say what it was.  

It was a huge wake-up call to economists.  It was like having a structural engineer tell you that she really couldn’t explain why the bridge she just designed would stand up.  By 1987, the search for the X-Factor earned Professor Robert Solow the Nobel Prize in Economics for demonstrating that the introduction of new technology was responsible for as much of 80% of the growth in a nation’s gross domestic product.

That’s how we know the power of innovation in general and, in particular, the power of foundational technologies like computers and the Internet to change our economic destiny.  It also reminds us of the power of one stubborn and innovative thinker to change our understanding of the world.
Monday, July 9, 2012
Lack of Passion is Fatal

“Nothing great in the world has ever been accomplished without passion.” Georg Wilhelm Friedrich Hegel

Recently I had the privilege to visit Austin, Texas. I was only in Austin for a few days but my impression was that Austin is a city of leaders. I met a number of key city executives from the Mayor on down; senior executives in research centers, Universities and corporations.  

Take, for instance Margo Dover, Executive Director of the Skillpoint Alliance and the folks at Austin Free.net. These are two examples of leadership support in the Austin area that help at very different levels, but are making a huge difference providing access and training to its citizens using computer technologies. I spent a fascinating day primarily focused on digital inclusion and I was not disappointed. In fact, I was thrilled to listen to the enthusiasm and observe the passion of each of the people who attended the roundtable at Skillpoint. One of the projects Margo presented to me is called STEM, a consortia of high-tech industry and education leaders engaged in addressing workforce attraction and implementation. Other initiatives offer training, access to computers and advice and support to address “digital-divide” issues. In partnership with Austin Community College (ACC), Austin students are provided an opportunity to target entry positions in local industries. Another program that Margo championed is called the Gateway project which provides job training aimed at rapid entry level job development. This no-cost entry level program is an alternative to ACC and meets the gap in developing and supplying entry level workers with computer skills.

At the other end of the spectrum, but equally passionate is Austin Free.net, where a slightly different client is being served. These are people living on the edge or perhaps living closer to the poverty level but are desperately trying to do better for themselves and their families and therefore seeking to be part of the digital world. The centers that Austin Free.net serve support those who want to learn how to use a computer and gain basic skills to enter the job force. With a $2 million dollar grant, the Austin Free.net staff were thrilled and extremely proud to show me their tight accommodations and small computer labs crammed with computers. Each room is chock-o-block full of local people using the computers which are available to them during the day. A sign says that they have a 4 hour maximum. “This allows them to complete course projects or look for jobs or take tests,” explained the chief administrator, “Libraries and other access centers limit use of computers to 30 minutes at a time. You can’t get enough done in that time.”  This facility, and 17 more like it across Austin, supports bridging the gap in the digital divide in the community. In addition to community centers, there are computers in libraries, seniors facilities and in local schools. The City of Austin provides a sustainable annual grant of $175,000 to assist in encouraging technology literacy.

These leaders provide a degree of passion that is not easy to forget. But, the epitome of passion, civic leadership and collaboration is a fellow by the name of Pike Powers. Pike is an older gentleman, but I would guess in his younger years you did not cross him. A real life Texan, Pike was referred to me as “a super-lawyer-turned-entrepreneur” whose leadership, nearly single-handedly helped turn Austin from a university town into a high-tech powerhouse. All that was missing was the 10 gallon hat! I met Pike at various times throughout my visit to Austin. He was almost ubiquitous during my visit. Finally we sat down and he told me his story.

Back when Austin was still a backwater state capital, Pike promoted a new creative spirit in the capital city - one that seized on global opportunities for economic development. According to Pike, “that effort began in the governor's office where I rallied the community toward the goal of landing the most prestigious economic development prizes of the 1980s - the Microelectronics Computer Technology Consortium (MCC) and SEMATECH.” SEMATECH was launched as a bold experiment in industry-government cooperation, conceived to strengthen the U.S. semiconductor industry. The consortium formed in 1987, when 14 U.S.-based semiconductor manufacturers and the U.S. government came together to solve common manufacturing problems by leveraging resources and sharing risks. Austin, Texas, was chosen as the site largely through Pike’s leadership and passion in consortia-building and collaboration. Pike and his team not only attracted these landmark research and development operations, but many tech employers (Applied Materials, 3M, and Samsung, among others) were also attracted to Austin.

Today, Pike continues to help mobilize Austin's ever-growing high-tech community to create collaborative networks among the business, civic, philanthropic communities. As the leader in creating the Texas Technology initiative in 2002 to redefine and reinvigorate the collaboration between government, academia and private industry, Pike argued for the need to stay globally competitive through incentive programs. Accordingly, the State of Texas created a $295 million Enterprise Fund in 2003 and the Texas Emerging Technology Fund in 2005. That year, Pike was selected by the Austin Chamber to be Austinite of the year. Every city deserves a passionate leader and economic development activist like Pike Powers.

Sunday, July 1, 2012
In the Broadband Economy, Small Places Rule
I have had the pleasure to work with a dozen small communities over the past two years.  They range from single towns of 5,000 people to entire counties of 40,000.  They are mostly in rural areas but some serve as the hinterland of midsize cities.  And they have convinced me that we may be entering the Age of the Small Place.  

In the Age of the Small Place, the size of your population matter much less than its skills and talents.    Your geographic location counts for much less than your connectivity.  Your scale – whether measured in money, size or people – has less impact on your future than your brains and determination.  

The last 90 days have shown me three examples of Small Places, each amazingly different.  The first is Oulu, Finland, one of our 2012 Top Seven communities, a place of 68,000 people living 200 km south of the Arctic Circle.  The second is Stratford, Ontario, Canada, another Top Seven, with 32,000 people, a city that mixes Shakespeare, agriculture and digital technology into a potent economic brew.  The third is Singapore, the city-state at the southern tip of the Malay Peninsula, a former Intelligent Community of the Year that is home to 5 million people living in one of the world's most modern economies.

Singapore is a Small Place?  How can that be?  As a city, it's big.  But as a country – which is how it thinks of itself – it ranks 116th in the world, just behind Finland and ahead of Turkmenistan.  It was thrown out of the Malay Federation in 1965 to find its way as an independent state.  At that time, the consensus was that it was doomed to failure, thanks to lack of natural resources and land, as well as severe shortfalls in education, housing and employment.  

But it had the attitude of a Small Place, and that attitude proved central to its success.  

That attitude has three aspects.  The first is being fearfully, compulsively open to the world.  I use those adjectives advisedly.  It is no easy thing to acknowledge how tightly our local economies are linked to the global one, and how much depends on decisions and random events far beyond our borders.  Like children, we prefer to think ourselves safe within the familiar confines of home.  But not these communities.  

Singapore's leaders like to say that their only natural resources are the skills and industry of their people.  The city transformed itself into a secure, efficient place for the world to do business, protected by the rule of law, in a part of the world where such things are still rare.  In Oulu, they say that the entire nation of Finland is too small, population wise, to serve as a market, which is why since Viking times its people have looked outward.  For Stratford, decades of recurring industrial transitions have sent them searching for opportunity from Silicon Valley to Tokyo, something very few cities of their size even consider.

The three communities are also determined to control their destiny.  Being open to the world, they know that destiny often has the winning hand.  But that does not stop them from playing to win.  Sitting at dinner with officials and executives in Singapore in June, I recognized the same attitude I had seen in Stratford and Oulu in April.  In every crisis, there may be a hidden opportunity.  In every opportunity, there may be a chance to run the table.  

The third attitude they share is an outsized pride.  You will never meet people more quietly, impressively proud of what they have been able to accomplish together.  Not self-satisfied, far from boastful, frankly admitting their flaws.  But sure of the value of what they have built and confident of their ability to keep building.  

In the Age of the Small Place, the value of size and scale has not vanished.  Sitting on top of a major natural resource or a key trade route is still a good idea.  But the penalties for being small and out-of-the-way are shrinking fast, as global broadband network becomes ever faster and cheaper, and improves our lives at an ever greater rate.  Keep your eye on the Small Places.  They may not be making headlines today but I suspect they will make history tomorrow.
Saturday, June 16, 2012
Never Miss an Opportunity to ask your Driver …
Over the Winter and early Spring of 2012, the ICF Co-Founders split their duties to evaluate some of the Top 7 Intelligent Communities around the world. It is a daunting task to cover the globe over a three or 4 month period. But somehow we do it year after year and we are grateful to learn about each of the Top 7 Intelligent Communities.

One of the tricks is to never miss an opportunity to ask your taxi driver from the airport about the community you are visiting. They are a font of frank knowledge and they can give you a perspective that concentrates the lens on a community like no other. For instance, in a matter of 40 minutes, I was given the overview of Austin by my driver that reads like a personal shopping list of interesting facts and figures. “Welcome to the home of Willie Nelson, Lance Armstrong, Kevin Costner and Sandra Bullock. Have you been to Bullock’s restaurant, Bess, yet? Ya gotta go! And the ancestral home of author O’Henry. Some of the Go-Go’s and the Dixie Chicks are also running around town. Ya know that George Bush was Governor here from 1995-2000 before he became President? And Lyndon Baines Johnson lay in state here in the Headliners Club after he passed on. That is where you get the buffet now.”

Austin is a city that is in the south, yet feels like it has four seasons. In late February, when I visited Austin, the trees had shed their leaves, yet you can spot the odd palm tree along the river as well. It is a car dominated city, yet a single Light Rapid Train passes in front of my taxi. I will never see it again during my visit to the city. My driver complains that it only services part of the inner city. “Transit is a controversial matter here, mainly due to the cost.” Everything gets weighed from a cost-benefit analysis. Austin is fiscally conservative, yet very liberal in all other senses.”

 “Yep, we are the blueberry in a sea of red tomatoes. You’all will hear that many times over from the locals. And proud of it, too. Wouldn’t have it any other way. It’s the reason I came from Atlanta some twenty years ago. The rest of the state of Texas is very conservative, but Austin has always been liberal and attracts those kinds of folks.” We drive down Congress Avenue. It is a main boulevard like so many in thriving US cities today, robust but also in transition, especially at its core. New high-rises developed within the past decade have been built to meet the demand of the new service industries mixed with a growing condominium market to meet the demand of young and affluent purchasers. Mixed among the shiny new offices are parking lots with BBQ trucks selling brisket and beef ribs, BBQ chicken and sausage. The smell of hickory smoke fills your nose and you can’t wait for the next meal to come around. On 6th Street, the seedy bars become a magnet for music lovers in search of jazz, country, rock and roll all fusing in a mixture of sounds on the street as you pass by one open window to the next. Names like the Blind Pig, Coyote Ugly (yes! based on the movie of the same name) and The Alamo blast music into the mild winter air. “This is the center of the music and interactive digital world during Spring Break in March. Ever hear of South by Southwest? Hundreds of thousands of visitors, artists and producers will be here in the middle of March, just in time to welcome the bats to Austin. And oh, by the way, Twitter was launched here,” says my driver as we approach our hotel. “And Bruce Springsteen is the headliner this year. Anything else you want to know, don’t hesitate to ask – welcome to Austin!”

I was in Austin to validate their application, as my colleagues were in Stratford, Quebec City, Saint John, and Oulu. My other cities to evaluate this year were Riverside and Taichung City in Taiwan. Each visit is different and learning from community insiders like taxi drivers is usually among the best experiences.  

And speaking of taxi drivers, have you ever heard of Mexico’s “Vigilante Taxi Driver” Program? Nearly 3,500 taxi drivers in the City of Tuxtla Gutiérrez (population 555,000) located in the Mexican state of Chiapas use their mobile phones to alert the Citizen Monitoring System about accidents, potholes, downed street lights and leaking water mains, as well as crimes in progress. Think of it as a 311 service on wheels, and more! Launched as the Vigilante Taxi Driver program, it involves citizens in improving public safety and quality of life in this community. Prior to the development of the program, crime was rampant and the city was challenged with this issue. The Vigilante Citizen Monitoring System consists of an integrated platform combining cell phones with multimedia, GPS and Web platform that city agencies use in making decisions regarding safety and local improvements. Since the program was initiated, drivers have reported on nearly 2,500 car accidents and 146 stolen vehicles. It has assisted in dismantling kidnapping and car-theft gangs, identified counterfeiters of license plates and official documents and saved the lives of more than 130 people injured in accidents or crimes.

So the next time you take a cab anywhere, don’t just think of these drivers as a simple means of getting from point A to point B. They are an integral part of the cities information base, tourism department, crime prevention service and veritable bastian of citizen participation at its best. As a result, ICF is giving the Tuxtla Gutiérrez Vigilante Taxi Drivers ICF’s Founders Award. ICF Co-Founders cite that the “program represents a near-perfect blend of technology and citizen participation. It is the essence of ordinary technology used to achieve a high level of innovation. It relies on the mobile phone—a simple technology—to engage citizens in improving their community.”

Here’s to the taxi industry everywhere… Salute!

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