Big Think

How can 3 million job openings mean bad news for America’s economy?

Business Week argues these open jobs, in this downturn, provide “evidence of an emerging structural shift in the U.S. economy that has created serious mismatches between workers and employers.”

If you look at the jobs, most of them are in services: education, healthcare, professional and business services. Many of them probably represent a significant step down for a lot of the unemployed, and even so will require extensive training (like teaching or nursing). Business Week argues that the housing bust has made it impossible for people to move to where the new jobs are.

Its solution: Retrain workers.

Both the government and employers both need to invest in training. Business Week notes that there is $3.5 billion in the stimulus package for training. But many businesses are reluctant to train workers, as Peter Cappelli made clear in Talent on Demand. Nor will training get people out of homes.

What do you think, BNET? Can we train our way to prosperity?

The way the brain evolved suggests that businesses will continue to become more team-oriented. That’s one of the important lessons for modern commerce that I picked up last week in Cambridge, England, where I listened to a variety of thinkers discuss human evolution and the brain.

The seminar, part of the Templeton-Cambridge Journalism Fellowships, brought together thinkers from disciplines like anthropology, archaeology, biology and neuroscience. One theme: the brain seems to have developed through social behavior. Rather than being part of a drive towards DNA reproducing itself thanks to our ’selfish’ genes, which smacks of survival of the fittest individual, the brain appears more likely to have developed in response to group interaction. That suggests that we evolved to promote survival of the fittest group. (more…)

They say that nobody should start a company to make money. Here’s proof: for all the buzz about biotech, in 40 years (really, 42, since Genentech’s founding in 1976), the biotech industry as a whole never made a profit — until last year. Drawing on data from publicly-traded companies, Peter Winter, editor at the biotech merchant bank Burrill & Co., put together a report that found biotech as an industry made money in 2008, about $9.4 billion in net profits.

That might seem like bright sign for biotech, given what a bad year 2008 was for so many industrial sectors. But, as Winter tells us in this podcast, biotech in the black, 2009 could be much worse. After all, only 67 biotech companies were actually profitable in 2008. Worse, almost all the profits, about $8 billion, went to three companies: Genentech, Amgen and Gilead.

Winter says that the 298 companies in biotech lost a combined $6 billion (these are, of course, just the publicly traded firms). He expects a very challenging next 12 to 18 months for the capital-hungry biotech sector. He thinks as many as 200 biotech firms are in trouble, and perhaps one-third of all biotech firms will disappear, through acquisition, merger or just plain death.

“The industry will be totally different 12 months from now,” Winter says.

One promising thing for those starting out now: the Big Three of biotech all got going during tough times — Genentech in 1976, just after the vicious 1973-75 recession, Amgen in 1980, as America dipped in and out of recession, and Gilead in 1987, the year of a major market crash. When Genentech started, almost nobody believed in biotech. If nobody believes in you now, maybe in 40 years you’ll be looking at an entire industry that’s finally making money.

Here’s a video interview with Judy Estrin, serial entrepreneur and author of “Closing the Innovation Gap: Reigniting the Spark of Creativity in a Global Economy.” It’s conducted by The McKinsey Quarterly, but appears to be a registration-free bit of content.

Estrin’s interview is broken into six parts, mostly running from between 2 and 4 minutes, except the minute-and-change of advice for the next president (the interview was conducted before last year’s election):

• The importance of basic research
• How companies should manage innovation
• Learning from failure
• Innovating on three horizons
• What you can (and can’t) learn from your customer
• How should the new president of the U.S. encourage innovation at the national level?

These vary in value. About innovation in the U.S., she’s a Cassandra, and you’ll either agree with her or disagree. Her observations of failure, and how the attitude in Silicon Valley has changed towards failure, is worth a listen if you care about Silicon Valley culture. Her discussions on how to manage innovation and her innovation model, innovating on three horizons, are excellent glances into how she’s achieved her track record as a technology executive and entrepreneur. Her basic point about listening to customers is a fine reminder of things we should already know (though it irritated me to hear her say that IBM would never have come up with the PC if it had listened to her customers. First off, at least some of IBM’s customers did want PCs, because of all the Apple IIs running around. Secondly, IBM had tried at least six times to create a ‘personal’ computer before the original IBM PC was introduced.) Her advice for the president is what you might expect: stimulate an industry around energy independence and fighting global warming.

I’ve been fooling around with theBudget Hero game on American Public Media’s Web site. I surprised myself by making government more efficient, achieving a greener nation, and managing to stave off budget disaster until at least 2070. On the other hand, I did not create the economic stimulus I hoped to achieve, ensured that the government will not be helping me put my kids through college, lowered my Social Security and Medicaid benefits and cut defense and discretionary spending, as well as all earmarks, good and bad. This game is pretty good. Some might want to see more radical choices — for instance, I could only cut defense and government spending by a fixed percent, and could not eliminate any agencies. A tip of the hat to Business Pundit, who was less aggressive than I, and more likely to get votes.

Tom Peters has scribbled down 121 (and counting) rules for innovation, which he has posted over the last week or so, though he keeps adding to them. He has a PDF of them here. A lot of them overlap, and some of them are just plain duplicates — 33 and 42 both call on companies to be diverse, but to avoid old people (though Peters thinks the over-55 demographic (or what he calls the Boomer-Geezers) “is the market — the rest is details,” he doesn’t think companies should expect old people — and he himself is 66 — to innovate). He also reminds us more than once to celebrate failures.

There is a nice collection of quotes on innovation in an appendix,  as well.

Depending on your vacation time, he’s created an innovation thought for the entire work year. I wonder why he didn’t create the Tom Peters! 2009 Innovation Calendar.

Libertarianism was under fire late last year as the financial meltdown seemed to sweep away the notion that business deregulation – the removal of government oversight from the workings of business – was the key to prosperity.

Libertarians counterattacked immediately, arguing that the problem was that government had become too big in the first place.

Of course, government certainly didn’t get smaller this decade, thanks more to deficit-driven military spending than increased spending regulating the financial services sector. Nobody likes big government. But it’s absurd to say government is the only problem in a crisis of such massive proportions. The government deserves some blame, but it didn’t create and market exotically structured mortgages, or use those mortgages  to buy homes.

That there’s plenty of blame to go around should be obvious. But today’s Wall Street Journal has this libertarian apologetic, again blaming the government.

It’s right to raise questions about how the government has handled the bail-out. There’s even a nice line about how the more incompetent you are at business, the bigger the bailout you’re getting now. Like many good lines, it’s not actually true. Numerous incompetent bankers, and their shareholders, have been vaporized. Hedge funds, honest and otherwise, are taking it on the chin. There certainly isn’t a redistribution of wealth going on to anybody who isn’t a bank, and nor has there been for at least the last decade.

What to do? The writer, Stephen Moore, cites a passage from a novel by Ayn Rand, the patron saint of libertarians. In this passage, the hero calls for eliminating the income tax and firing all the government employees. Finally, we’ll be rid of public schools, police officers and libraries, and best of all, we’ll never again have to show anyone the terrible picture on our driver’s license. Even better, no more military! That is an attractive thought – we’d save almost $600 billion just on the direct line item. And without a military, it would be much harder to go off on deficit-feeding boondoggles like Vietnam and Iraq.

Moore doesn’t say anything about who’s responsible for the existing mountain of debt, once there’s no more government. Perhaps we just default. Or maybe we all volunteer to make debt elimination payments for a while. But at least they won’t be income taxes.

Sarcasm aside, the Libertarian position is a Do-Nothing position: Let everything fail that’s going to fail, and we’ll pick up the pieces in a few years and start over. That approach in the 1930s fueled totalitarianism, not libertarianism. Sure, things are different this time. But not that different.

In Better Management Through Drug Abuse, I raise the specter of top management requiring people to take certain kinds of mind-altering drugs. The arguments in favor of using such drugs, as put forth by academics, seem absurdly weak to me. And yet there are clear reasons to consider such drugs, or will be when they get better at boosting our performance, and we get better at personalizing medicine.

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To drive innovation, are big salaries or job security better incentives? Andreas Kluth, an Economist writer, says the answer is it depends. My friend Andreas cites a paper by Gustavo Manso, a finance professor at MIT’s Sloan School, who has published on creating incentives for innovation. Manso argues that economic incentives need to be put in place to allow people to fail.

Andreas points out the obvious potential for abuse in CEO golden parachutes and academic tenure. So he says that in cases where it is effort that matters, like the ongoing work to run a company, pay should be tied to performance, and there should not be a reward for faltering.

But for creative types, or those who need to take career-threatening risks, like academic researchers pursuing new ideas that are likely to fail, but could lead to breakthroughs, long-term job safety is key.

Andreas refers to this as failure-driven success, a worthy phrase.

In the future, corporate drug testing will be to see if you’re taking the drugs the company wants you to take.

An argument found and posted by Nick Carr, in Managing productivity through pharmacology, holds that people should be allowed to take drugs that dull their minds to everything but the task at hand. Carr takes this as the next logical step, as a follow-on to an editorial in Nature calling for governments to allow mentally healthy people access to prescription-only drugs like Ritalin. The scientists, several of whom hold chairs funded by drug companies, think that such drugs should not be used only as correctives, but for all those who want to stimulate their minds.

Carr is mildly concerned by the legalize it view of these scientists, but seems to see the Frank Pasquale post as a logical follow-on, though Pasquale holds that companies may require workers to take drugs so they’re focused solely on one task, thus increasing productivity.  Pasquale is being tongue-in-cheek: his real feelings are here.)

But even in the original Nature editorial is a weird leap of logic. The Nature editorial authors call neuro drugs the moral equivalent of exercise, sleep, nutrition, teaching, using computers, writing and language itself. They seem to have confused their moral equivalence with their moral hazard. Just because two things have a similar effect does not make them the same.

I’m not necessarily against brain enhancements — I have consumed coffee when tired, and I like to exercise to relieve stress and change my perspective (I took a walk before posting this). More to the point, it’s painful to make errors or fail to recall a fact at a crucial moment or to have the mind wander when you need it to be paying attention. At those moments, drugs sound pretty good. And if there were a drug that would make my first drafts better, I’d at least be tempted to take it.

But here are some issues with encouraging people to pop mind pills. We know that we don’t have personalized medicine — we don’t know what drugs work for which people. Thus there are always side effects, sometimes severe ones. Even something as simple as caffeine pills might not work as expected; I well remember falling asleep despite having popped caffeine pills, and I’ve amped up on coffee only to find myself getting into raging arguments that killed everybody’s productivity. I also know people who were put on anti-depressants that caused other deleterious side effects, including life-threatening ones.

I’m also leery of things that dehumanize us, and drugs that get rid of our variations do exactly that.

Research suggests modest enhancements at best with today’s crop of brain drugs. We’ll probably get better at them. But should we? If you could take a drug that would make you a better manager, would you?