Who owns your data?

Who owns your data? That has been a long simmering issue in this new information-intensive economy. Now a new consensus seems to be emerging that people should be paid for access to their personal information (see story in the Wall Street Journal – The Market for Online Privacy Heats Up). A report released earlier this month by the World Economic Forum (Personal Data: The Emergence of a New Asset Class) argues that:

Increasing the control that individuals have over the manner in which their personal data is collected, managed and shared will spur a host of new services and applications. As some put it, personal data will be the new “oil” – a valuable resource of the 21st century. It will emerge as a new asset class touching all aspects of society.

It is good to see that information is being treated as an asset. I’m not sure I would go as far as equating personal data with the new “oil”. I think that title belongs to the broader class of intangible assets (see Mary Adams and Michael Oleksak Intangible Capital: Putting Knowledge to Work in the 21st Century Organization).
But, the WEF report raises the point we made a number of years ago in our report, Information Age: Reframing the Debate that many of the main issues of the information economy are not technological but social. They are also interrelated:

we currently treat privacy, computer security, intellectual property rights, freedom of information, “right-to-know” policies and free speech issues as separate policy areas. Yet, they are all part of managing the information commons: what information is and should be private, what information is and should be proprietary and what information is and should be public. A more comprehensive approach is needed.

The WEF report is part of an ongoing project on Rethinking Personal Data. They might want to also rethink the scope of the project and tackle some of these broader questions.

4Q 2010 GDP revised downward

Not so good news this morning. BEA released the second estimate for 4Q GDP — which was revised downward to 2.8%. The first (“advance”) estimate last month was that GDP grew by 3.2% (see earlier posting). According to BEA, the revision “reflected an upward revision to imports and downward revisions to state and local government spending and to personal consumption expenditures (PCE) that were partly offset by an upward revision to exports.”
The new data is disappointing. As I noted last month, economist had expected 3.4% GDP growth for the 4th quarter. And, as the Wall Street Journal notes, “Economists surveyed by Dow Jones Newswires had expected GDP to be revised up to a 3.3% growth rate in the government’s second estimate for the final three months of last year.”
The revisions had a minor impact on one of the concerns I raised last month about the slowing of fixed investment. The revised data shows that investment in equipment and software rose by 5.5% rather than 5.8%. Investment in IT equipment and software grew by 18.8% rather than 20.7% reported earlier and investment specifically in software grew by 5.4% rather than 6%. Investment in transportation equipment dropped by only 8.8% rather than 9.3% and investment in industrial equipment grew by 3.8% rather than 4.2%.
And once again I would point out that the GDP numbers do not offer any guidance on investment in intangibles other than software. So we do not know whether companies have increased their investment in important areas such as human and organizational capital.

Are public-sector workers overpaid or underpaid?

Following on my earlier posting about Wisconsin and valuing employees, here is a comment from the Schumpeter blog over at the Economist that raises the broader issue (The government as an employer):

THE American blogosphere is abuzz with a debate about whether public-sector workers are overpaid or underpaid, with the left and right taking predictable positions. They are all surely missing the real point. Such workers are both overpaid and underpaid: the public sector is characterised by a relatively flat distribution of wages, with able people paid too little (and thus constantly poached by the private sector) and time-servers paid too much, and with the main driver of promotion being years of service.
It is clearly important to reduce the overall wage bill and bring public-sector pay and pensions under control. But, in the long run, it is also important to pay good people more, speed up their rise through the ranks, and generally widen the wage distribution in government jobs.

We need to modernize the system – not take a meat cleaver to unionization.

Appointments made to White House Jobs and Competitiveness Council

Yesterday, the White House announced the list of members of the new President’s Council on Jobs and Competitiveness. Here is the annotated list (courtesy of the Wall Street Journal):

Steve Case, co-founder of America Online. Mr. Case chairs Revolution, a holding company that oversees multiple companies, which include Zipcar, LivingSocial and Everyday Health.
Kenneth I. Chenault, chairman and CEO of American Express Co.
John Doerr, a partner at venture capital firm Kleiner Perkins Caufield & Byers. Mr. Doerr hosted Mr. Obama and a gaggle of the tech industry’s geek glitterati at his San Francisco home last week.
Roger W. Ferguson Jr., president and CEO of TIAA-CREF, retirement services purveyor for pensioners in academia.
Mark Gallogly, co-founder and managing principal of private equity firm Centerbridge Partners. Mr. Gallogly hails from the Blackstone Group.
Joseph T. Hansen, President of the United Food and Commercial Workers Union (UFCW) and chaiman of Change to Win, which rallied voters to Mr. Obama’s presidential bid.
Lewis “Lew” Hay III, chairman and CEO of power company NextEra Energy Inc.
Gary Kelly, chairman, president, and CEO of Southwest Airlines.
Ellen Kullman, chairman and CEO of DuPont.
A.G. Lafley, former CEO of Procter & Gamble, now Special Partner at Clayton, Dubilier & Rice.
Monica C. Lozano, publisher and CEO of La OpiniĆ³n, the nation’s largest Spanish language daily newspaper.
Darlene Miller, owner and CEO of Permac Industries, a Minnesota machine parts manufacturer.
Paul S. Otellini, CEO of Intel Corp.
Richard D. Parsons, senior adviser at private equity firm Providence Equity Partners Inc.
Antonio Perez, CEO of Kodak.
Penny Pritzker, Obama fund-raiser and chairman of TransUnion, CEO of Pritzker Realty Group and chair and co-founder of The Parking Spot, Artemis Real Estate Partners, and Vi, formerly known as Classic Residence by Hyatt.
Brian L. Roberts, CEO of Comcast Corp.
Matt Rose, CEO of Burlington Northern Santa Fe Railway Corporation.
Sheryl Sandberg, chief operating officer at Facebook.
Richard L. Trumka, president of the AFL-CIO, the nation’s largest labor federation.
Laura D’Andrea Tyson, professor at the Haas School of Business at the University of California Berkeley, and National Economic Adviser in the Clinton administration.
Robert Wolf, chairman of UBS Americas and president of UBS Investment Bank; Obama fund-raiser and frequent golf buddy.

It is an interesting mix of sectors and industries — some of the usual suspects and a dash of others. I especially like the fact that the CEO of Southwest Airlines is on the list. They are a prime example of organizational and operational innovation. Likewise, A.G. Lafley, former CEO of Procter & Gamble is one of the foremost operational experts of open innovation. Now, let’s see what they come up with.

Virtual reality starts changing the design process – with government help

Earlier this week, I posted an item about how technology could change the production process (The rise of the machines). In that posting I specifically highlighted a new technology that allowed for the “printing” of items in solid three dimensions. This could change how goods are “manufactured.”
But there is another part of the story — how goods are designed. A couple of years ago, we published a report on Virtual Worlds and the Transformation of Business: Impacts on the U.S. Economy, Jobs, and Industrial Competitiveness. The report described, among other things, how virtual worlds can be used in the collaborative design process. That possibility is rapidly becoming a reality.
For example, a couple of years ago, the Navy starting using Virtual World for prototyping. As a story in Government Computer News (Navy creates a virtual world to test submarine design) notes:

The Naval Undersea Warfare Center is doing that with an experimental approach to submarine design. It has created a Second Life-like virtual replica of a proposed design of a submarine’s control hub using architectural renderings of the new design. By being immersed in a new environment, submarine commanders will have a better idea of the proposed changes to the hub and can offer more constructive feedback.
“We would like to support rapid prototyping,” said Douglas Maxwell, technical lead for the project. “Basically, we would like to create an environment where the fleet, shipbuilders and scientists can collaborate on platform design. We could create many iterations of advanced design and let the users tell us which ones work and which ones don’t.”

Here are a couple of more examples. Sikorsky’s virtual reality center puts designers inside the unbuilt CH-53K heavy lift helicopter:

The Sikorsky CH-53K heavy lift helicopter currently being developed for the U.S. Marine Corps will contain more than 20,000 individually designed parts. This means building an experimental prototype of the aircraft ends up being one hell of a complicated three-dimensional jigsaw puzzle. And if just one of the pieces doesn’t fit where it’s supposed to, it can cost millions of extra dollars. To find production and maintenance issues before things progress too far, Sikorsky has unveiled a virtual reality center that the company hopes will save it time and money in final assembly of the aircraft.

VR Breakdancing: Lockheed’s New Jet-Building Tool:

Officially, the Collaborative Human Immersion Laboratory, or — yes — CHIL — is an immersive virtual reality mechanism to cut down on the cost of building America’s Air Force. In reality, the CHIL gives engineers an excuse to do some VR line dancing. But that rings hollow. Lockheed Martin has just built its engineers a virtual-reality playpen, unveiled today and based in Littleton, Colorado. Employees are hooked up to a suite of motion-detecting sensors, gamer gloves and a head-mounted display helmet, with wires hanging out of their extremities and optional Tron-ready clothing.
Inside the CHIL’s “Cave” — the CHIL Cave! — they see themselves as uncanny valley-ready avatars, allowing them to test out and adjust various projects that the company manufactures to test their weak spots, all before the prototypes get physically built. Lockheed says it wants to use the CHIL to tweak its Air Force products, like the next-generation GPS satellite or the F-35 Joint Strike Fighter family of jets.

There is an important lesson here for public policy. These examples are all from the defense sectors. Once again, here is a case where defense procurement can lead in a manufacturing revolution. After all, remember it was the production of rifles that help spur the movement to interchangeable, machined parts that were a hallmark of the industrial revolution.
The trick will be more wide-spread adoption of the technology. As we noted in the report:

Policies funded by DARPA or DOC’s Manufacturing Extension Partnership could support government-industry associations with the exploration and evaluation of how Virtual Worlds improve product development and services between suppliers, end manufacturers, or service providers. These collaborations could also be linked to state programs to improve the use of new technology.

But even more needs to be done.

The federal government should promote policies that focus on the four main indicators that are likely to enhance this nation’s competitive status in the Virtual World economies of the future. The first group of policies should focus on ways that firms can transform themselves into collaboration enterprises. The second group of policies should focus on how rapidly collaboration enterprises can adopt new computer-based technologies. The third group of policies should address how well equipped employees are to work in a collaboration enterprise world. The fourth group of policies should focus on strengthening the technology base of the U.S. economy and creating a suitable environment for the operation of Virtual World technology.

In this way, we can help make sure these technologies benefit the entire US economy — and that the US is on the forefront of the next manufacturing revolution.

On Wisconsin?

I find what is happening in the State of Wisconsin right now unsettling. And I don’t mean just the protests and counter-protests. And not simply because the move by the Governor to break the public-sector unions is more a demonstration of political power than a budgetary issue. But because as a management and budgetary matter, it is antediluvian. It represents the worst of industrial era thinking. In a time when most CEO’s at least give lip service to the notion that “our employees are our most valuable assets,” the Governor seems not to have gotten the memo.
Steven Pearlstein makes a good point in his column today (Making sense of Wisconsin’s union showdown:

Back when I was working at Inc. magazine in the mid-1980s, we loved nothing better when approaching a public-sector issue than to ask how the private sector would handle it. Faced with the situation in Wisconsin, we would have called up Tom Peters or Peter Drucker and posed the example of a new chief executive brought in by the shareholders (i.e., the voters) to rescue a company suffering from operating losses (budget deficit) and declining sales (jobs). Invariably, they would have recommended sitting down with employees, explaining the short-and long-term economic challenges and working with them to improve productivity and product quality in a way that benefits both shareholders and employees.
Now compare that with how Wisconsin’s new chief executive handled the situation: Impose an across-the-board pay cut and tell employees neither they nor their representative will ever again have a say in how things will be run or get a pay raise in excess of inflation. A great way to start things off with the staff, don’t you think? Remember that the next time you hear some Republican bellyaching at the Rotary lunch about why government should be run more like a business.

Well, the Governor does seem to be running the state as a business — a 19th Century business. And we have seen how well that works in a service-oriented business in the 21st Century. Remember the story of Circuit City? As a cost cutting measure, Circuit City fired its’ most expensive (read most experienced) workers. Customers left and Circuit City went bankrupt.
So my question is this, will Wisconsin be the Circuit City of the public sector?