From the Wall Street Journal – “Tulane Announces Downsizing In Wake of Hurricane Katrina”:
Battered by Hurricane Katrina, Tulane University announced a major downsizing that will eliminate the jobs of a third of its medical-school faculty, do away with 22 programs of study and suspend eight sports.
While this is understandable given the financial situation, this could be worrisome for the future of New Orleans. As I said earlier, how Tulane copes will be a leading indicator of the future.
But, there is a bright point in this story:
Because of changing health-care needs and the reduced population of New Orleans, university officials said they plan to downsize the medical school’s clinical operations and put added emphasis on research and educational programs.
Keeping the research programs is key.
As the Wasington Post – “After Katrina, A Leaner Tulane” puts it:
Administrators say the long-term plan — which will ultimately reduce the annual budget by $55 million — is to create a stronger and leaner undergraduate school by focusing on strong programs in such areas as architecture, business, arts and sciences while jettisoning some engineering programs that were not as highly rated.
Tulane could come out of this as a stronger school – and one that can lead the nation in educational reform. That would be a positive for the future of the Big Easy.
While secrecy is a good way to protect designs from pirates (see earlier posting), openness can be a way to make others work for you. The open-source movement is the classic example. The “anime” industry (Japanese-style animation) uses “pirates” (aka hard core fans) as both a screening mechanism and as a workforce. Here is how it works (according to Fortune):
The most dramatic example of [the industry’s open] attitude is their tolerance for folks who have the potential to put them out of business: pirates trading anime online. And not just trading, but competing to see who can create the best subtitled version of a particular show.
This is open-source TV programming. “Fansubbers,” as they’re called, can spend more than a dozen hours collectively just to get a half-hour show ready for English speakers. The process is as orderly as an ant farm, with each fansubber having a specialized task. TV watchers in Japan start the process by recording an anime show and uploading it to the Net, typically a few hours after it airs. Bilingual fans around the world download the show and start writing out translations in text documents, which they post online or e-mail around. The first drafts have all kinds of mistakes – words are translated too literally or just wrong – and other translators make refinements. At this stage, self-appointed editors ask questions and make changes, then fan typesetters plug in the subtitles as well as the translations for words that pop up on signs or characters’ T-shirts. Finally someone somewhere encodes the completed version – and here there’s competition to see who can encode it with the fewest glitches and the best filters – and runs it through BitTorrent, a piece of software that allows large files to be downloaded quickly. Typically the fansubbers organize themselves in teams to make the process move more smoothly. All this is done for free.
Now comes the really interesting part — US companies then license the best of these translations for distribution in the US. And the system works.
Part of the reason is that the fansubbers police themselves with a zero-tolerance policy that would impress Eliot Spitzer. The first rule of fansub club: Don’t trade fansubs once a U.S. company licenses a show. . . .
The fansubbers themselves also scour the Net to make sure that despite all their hours spent translating, no copies of their work remain. “If you really like the show, you should go out to buy the DVD,” says the fansubber who goes by the online handle Quarkboy. In real life, Quarkboy is Sam Pinansky, a 25-year-old physics Ph.D. student at University California at Santa Barbara who’s researching string theory. Pinansky doesn’t mind the ephemeral nature of what he does. All he cares about is making sure there’s plenty of anime out there for him. “If you do buy the DVD, more shows like it will be licensed in the future. Our whole goal from the beginning was to get more people to like anime.”
This works for marketing as well:
Fansubbers also act as free focus groups for the U.S. anime distributors. The more people rally to translate a show on the Internet, the more likely it is to do well as a commercial product.
Innovation through anti-secrecy.
Many paths to the same destination.
While it is fashionable to assert copyright and patent protection for almost everything, there are other, more old fashioned ways of protecting ideas and designs: keep them secret. Pre-releases of products may be important to marketing purposes, but it also gives pirates a head start. It is widely suspected in Hollywood, for example, that pre-release versions of movies sent out to influence the Oscar process are the source of pirated copies seen on the street even before the premier.
One area where this secrecy is especially important is in designer fashion. Nothing undercuts the value of a design to see knock-offs floating around. A niche of that market — the wedding dress industry — seems obsessed with that problem. After all, no blushing bride wants to pay mega-bucks for that special gown just to see it show up at everyone else wedding. (Being male, I can only accept this statement as fact, rather than try to completely understand it. After all, as some one said, what’s the problem – it is guaranteed that the bride will be the only one in the room wearing that particular dress). So, wedding dress designers have taken an extra precaution to insure their clients will have at least one fleeting moment of uniqueness. No pictures — absolutely none — are allowed during the fitting process.
This came as a surprise (and disappointment) to a young friend of mine who is going through that pre-marriage ritual. She was eager to share the dress design with her bridesmaids. But the thought of having something special overrode any disappointment when the connection between pictures and knock-offs was pointed out.
So, secrecy still matters if you are trying to prevent piracy.
On the other hand if you are looking for collaboration in design, then secrecy can be a problem.
More on that next.
Yesterday, I attended the public session of the National Summit on Competitiveness at the Commerce Department. Originally proposed by Congressman Frank Wolf, the summit appears to have shifted from a Congressional activity to an Administration event. The meeting was held in two phases: a public session with the official participants on the auditorium stage making statements about the issue, and a series of closed door breakout session where participants met with various Cabinet members. (See NAM press release for a picture of the public session.)
Unfortunately, I’m not sure if anything will come of this exercise. The Summit statement – prepared ahead of time – was a reiteration of what has become the litany in the high-tech community: more Federal spending for basic research; more science and engineering graduates; better training for K-12 math and science teachers; reforming immigration law to make it easier to hire and retain technically trained immigrants; better technology transfer to the private sector; and more attention to emerging advanced technology areas.
It is also a policy agenda that could have been (and was) written 20 years ago.
The public discussion added only a little to that agenda. While Commerce Deputy Secretary David Sampson mentioned the importance of intangibles in his opening remarks, patent reform was never brought up. Sampson talked about the need for non-technical innovation, but did so in the context of needing innovation in government practices and policies, not about fostering non-technical innovations in the economy. He did raise the problem of energy and health care costs as drags on US competitiveness.
While one participant mentioned the importance of the Manufacturing Extension Partnership (MEP) in passing, the need to help MEP shift from manufacturing quality to innovation was never discussed. Only a couple of times did participants talk about the problem of getting the right skills at the production level; the entire focus was on higher education. And while one participant focused in on the critical issue of applied problem solving skills, the discussion centered on technical math and science education.
In fact, when a Congressman raised the concern that the movement of computer and engineering jobs offshore was scaring young people away from science and technology careers (because they don’t see a secure future in those fields), his concerns were immediately discounted and downplayed. There are a lot of engineering jobs in this country, it was claimed; the problem is the lack of US graduates in those fields.
Unfortunately, this type of narrow focus dominated the meeting. Not doubt, all of the issues raised at the Summit are important. However, they are but a portion of the problem and they don’t necessarily address the newer aspects of our competitiveness challenge. What troubles me about the meeting is the dog that didn’t bark: all of the issues that were not raised – at least in the public session. Let’s hope that some of these issues were raised, and discussed frankly, behind closed doors.
In an earlier posting Symbols, mascots and intellectual property, I suggested the following to resolve the controversy over use of Native American tribes as college mascots:
Maybe what NCAA should do is require those schools that use specific tribe names to obtain the permission of the tribe for the use of their intellectual property. That way the Seminoles could license the name to Florida State (which might help the different parts of the tribe – Florida and Oklahoma – work out their differences). And the Chippewas (Central Michigan University) and the Utes (University of Utah) and the Choctaws (Mississippi College) and the Sioux (University of North Dakota) and the Illinois Nation – Illini (University of Illinois) could decide for themselves whether or not they wish to be associated with the team.
Turns out, that is exactly what the NCAA has decided to do (according to a Washington Post story last month):
North Dakota was among 18 schools initially cited by the NCAA and is among 15 still under censure after Florida State, Utah and Central Michigan won reprieves, having documented that the tribes for whom their teams are named (the Seminoles, Utes and Chippewas, respectively) endorse the use. Starting Feb. 1, schools that can’t document tribal support won’t be allowed to host NCAA postseason games or wear uniforms with the offending names or logos in postseason play. Also subject to the ban are schools with generic nicknames, such as the Newberry (S.C.) Indians, because they have no “namesake” tribe to grant approval.
I still think the schools should be paying the tribes some royalties for the use of the names, however. Or at least give tribal members a free education or reduced tuition rates.
It looks like the Chinese are ready to fight back. According to a piece in yesterday’s Morning Brief in the Wall Street Journal (citing a report in the Legal Times), the Chinese are hiring more American lawyers to fight counterfeiting charges. What is to come is IPR litigation. As the Journal piece states:
although Chinese companies have yet to initiate patent claims against their competitors in this country, lawyers tell the magazine that day is not far off.
My own sources tell me that they have see “a sizable increase in interest by Chinese firms to actively assess the enforceability or weakness of patent portfolios – not looking at design around strategies but rather looking at the feasibility of successful re-examination or invalidation.”
This may be a spur to reform of the US patent system — imagine the political ramifications if the RIM or eBay infringement cases had brought by a Chinese competitor. My worry is that we will not take this as a wake up call. Nor will it be a tool for accountability, focusing on purging the system of invalid patents. Rather I fear that the amount of litigation will dramatically increase as others learn to use the system (with the presumption of injunctive relief) as a strategic device.
In the 1980’s we attacked the problem of Japanese patent thicket by (surprise, surprise) creating thickets of our own. I fear we are headed down the same path where we have created an absolute property right to ideas and a punitive legal system to back that right which can and is used as a competitive tool.
Having the Chinese take an interest in a valid transparent and enforceable IP system is in everyone’s interest. Having a US patent system that can be gamed for strategic competitive advantage and stifle innovation is in no one’s interest.
We need to reform the patent system — now!
From today’s New York Times – Intel and J.P. Morgan Chase to Expand Indian Operations:
Intel, the world’s largest chip maker, and J. P. Morgan Chase, the global investment banker, said on Monday that they would outsource significant operations to India, an indication that more complex high-value work was moving here.
Intel, based in Santa Clara, Calif., will invest more than $1 billion in India over the next five years, with $800 million going to expand its research and development center in Bangalore, the company’s chairman, Craig R. Barrett, said in a statement during a visit to New Delhi.
Intel’s news followed the announcement in October that Cisco Systems would invest $1.1 billion and triple its work force in India to more than 4,000 from 1,400 in three years.
Intel’s Bangalore center employs around 3,000 engineers who design and develop products. Mr. Barrett said Monday that its latest investment “demonstrates Intel’s long-term commitment.” Intel will invest the rest, $250 million, as venture capital in technology companies.
J. P. Morgan Chase said it would add 4,500 employees in India by 2007, mainly by setting up operations in Bangalore to support its growing structured finance and derivatives businesses globally. The company will hire a mix of recent graduates and experienced workers and will double the size of its operations in India. All 4,500 of J. P. Morgan Chase’s current employees in India are based in Mumbai.
The bank made news two years ago when it became the first global investment bank to hire 35 equity researchers in India to support its operations on Wall Street.
“In our experience, we have found high-quality, low-cost staff in India, and we want to continue investing in the country,” said Michael Golden, a spokesman for the bank who is based in London. “The investment is about meeting the growing needs of our business and not about shipping jobs from another location.”
Wall Street firms and large global banks have been particularly aggressive in outsourcing work to India in recent months. UBS said it would open its first center in Hyderabad, with 500 jobs, in early 2006. Goldman Sachs has 750 people in its center in Bangalore but has a capacity for 1,500 employees.
“This is way beyond mere cost savings,” Madhavi Mantha, a senior banking analyst at the financial consultancy Celent, said from Montreal. “Unless global banks are comfortable with the quality of work, they would not risk taking the work offshore.”
J. P. Morgan Chase said the new employees would process complex derivatives settlements and structured finance transactions. The company will hire about 400 people a month. By 2007, it will have almost a third of its back-office and support jobs, or about 3,000, in India.
Offshoring of work to India has steadily risen in the last few years, despite political discomfort in the United States over the trend. Recently, high-end jobs in areas like chip design and complex product design have been added to the relatively low-end call center and paid-by-the-hour software coding work.
Though salaries in India are climbing rapidly for entry-level workers and top managers, Indian employees still earn less than a fifth of what their peers in the United States do.
And why is it that everyone thinks we can continue to compete by just throwing more educated people at the problem?