JimPinto.com - Connections for Growth & Success™
No. 263 : 27 March 2009

Keeping an eye on technology futures.
Business commentary - no hidden agendas.
New attitudes, no platitudes.

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Automation Business Retreat

In the current financial downturn, the falling tide has lowered all boats, and the stock of all the automation majors had declined to less than 50% of recent levels. Lasting effects are hard to predict, but clearly there will be some fallout.

As revenues continue to decline, consider what happens: The bean-counters' cutback formulas result from simple spread-sheet calculations. Managers are told, "Your budget must be cut by X%." Few managers eliminate themselves, and so the next level in the hierarchy reviews and implements the cuts.

It takes a decisive marketing-orientated business leader to stop a steady decline. Accountants (bean counters) cannot do it. They simply track the decline with spreadsheets and matching cutbacks. Read the JimPinto.com automation weblogs to note the troops' despair, plus the deadening silence from top levels.

Meantime, what's happening at the top? The Honeywell weblog reports (not directly confirmed, but not denied) that CEO Dave Cote's 2008 compensation was $5 million, "up nearly 55% from 2007". Someone then started an informal poll: "Will Dave Cote forego a pay increase in 2009?"

The Honeywell weblog compared David Cote as CEO of a $35 billion company to David Farr as CEO of a $25 billion company, and quoted a press release, saying, "How's this for leadership?":

    "Emerson, started this year by cutting the salaries of its top five senior executives, trimming bonuses and putting a six-month delay on pay increases for salaried workers. Chairman, CEO and President David Farr reduced his 2009 salary of nearly $1.23 million to its 2007 level of $1.15 million."
Andrew Bond's Automation Insider reported that Yokogawa top brass took 40% pay cuts as third quarter net loss tops $400m and orders plunged by 25%. Says Andrew,
    "Yokogawa is finding itself the victim of a triple-whammy comprised of plummeting domestic demand, rapidly contracting overseas markets and a soaring yen which has appreciated by some 15% against the US dollar since September."
The UK financial times reported,
    "Rockwell made nearly 1 in 7 of its staff redundant last year as the collapse in the UK construction market wiped off more than 75% off pre-tax profits. But the company said the $17m in restructuring costs it had taken last year, including the loss of 700 jobs, left it repositioned to take advantage of its more profitable repairs and maintenance divisions. The company's share price has yet to recover from the 50% fall it suffered in just one day last November."
In March 2009, Rockwell stock declined to below $20, less than 1/3 of its levels in 2008. Market-cap was at $3 billion, making it vulnerable to takeover by ABB, or perhaps an offshore buyer.

When the recovery comes, as it inevitably will, expect significant changes in the automation business. Many major players will not weather the storm. There will be no bailouts, just buyouts. Acquired companies will provide acquirers with opportunities for consolidations (and cost-cutting eliminations) with an expanded customer base.

My old prediction will be finally fulfilled: The ranks of the automation Big-10 will shrink to just 5.

Click Read the Automation Company weblogs

Click RIFs, Layoffs & Golden Handshakes - Robert's RIF Rules

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Strategies for the downturn

No one really knows whether or when the current economic slide will turn around. My own view is that this is an inflection point, a serious break from the past, a wake-up call from old illusions.

For well-managed companies, this downturn offers the chance to re-examine fundamental value propositions and develop new strategies. Here are seven key strategies not just to survive, but to thrive, in the current business environment:

  1. Upgrade human capital: Look around your organization. Who is rising to the current challenges? Look for leaders and support them.
  2. Conserve cash: Reduce and restructure debt, preserve cash.
  3. Invest in innovation: Re-direct your best people to innovation projects. Move early to anticipate emerging needs.
  4. Acquire innovative start-ups: Look for attractive sources of future growth. Do NOT acquire ailing competitors just to consolidate.
  5. Focus on customers: Double the amount of communication with existing good customers. Don't acquire your competitors' cast-offs. Rebalance your customer portfolio.
  6. Don't stop advertising: Sign longer-term contracts with good media that's anxious to serve winners. Refine your advertising bang-for-the-buck, specifically with performance-based pricing.
  7. Don't cut prices: Don't try to match low-cost competitors-they'll eliminate themselves. Work your sales relationships to keep price-conscious customers loyal.
Developing a positive mindset is crucial. It's important to keep asking, "What's the opportunity?" as opposed to, "How am I going to survive?" If you keep your eyes focused on opportunity, you can see it and create it. Remain agile; be poised to grow. You can not only ride out shaky economic times, but emerge stronger and more successful.

For positive individuals at levels below top management, I have simple advice: Don't wait to be riffed, laid-off or whatever the expression. Look for good, complementary partners, and start your own company. This is a GOOD time to DO something different.

Click Automation World - Strategies for a Downturn

Click Recession Entrepreneurship

Click Quit your job - become an entrepreneur

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Software as a Service - Cloud Computing

Over a decade ago "The Network is the Computer" was Sun Microsystems' slogan. Now the concept is emerging with a new wave of explosive growth.

Cloud Computing is the metaphor for the complex infrastructure available as a service via the Internet. Software as a Service (SaaS, pronounced "sass") typically delivers applications through the browser. This could be just one application (Salesforce.com is by far the best-known example among enterprise applications) but that is being extended to several desktop applications, and SaaS is also becoming common for HR and ERP and others.

Utility computing is a form of cloud computing, already available from Amazon.com, Sun, IBM, Google, Yahoo and others. The original offerings were storage and virtual servers on demand. But now, they are replacing complete datacenters, enabling users to stitch together memory, I/O, storage, and computational capacity as virtualized resource pools available over the Internet.

In the "old" days, huge hunks of software were installed on individual computers as though they were isolated lumps of hardware. "End User License Agreements" (EULA) required users to have a fully paid license per computer. Installation processes, plus regular updates and bug-fixes, were a pain. How many terabytes of packaged software remain dormant on how many computers?

SaaS applications are licensed for use on demand, removing the cost and burden of installed software on every computer. This greatly reduces the ongoing maintenance required for conventional "full" installations, and facilitates central control of all updates and upgrades.

SaaS shifts the burden of installation and keeping an application up-and-running from the user to the supplier. Users can leverage rapid with very little support. Customers benefit from the vendor's latest technological features, without the disruptions and costs associated with software updates and upgrades.

SaaS-delivered software enables end-users to deploy more quickly at a much lower cost - typically 2 to 4 times better than fully installed EULA alternatives.

SaaS and cloud-computing are being adopted by many small and large enterprises, including General Electric, and Procter & Gamble. SaaS is here, and it's the wave of the future.

Click Automation World - SaaS solutions surge

Click The Great Software Showdown - SAAS

Click When Everything Lives In The Browser

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Biotech Tsunami - growing new energy

I am enthralled with some of the latest videos announced by TED (Technology-Entertainment-Design - 18 minutes talks with significant people.)

You MUST watch Juan Enriquez - his conversational style and lucid descriptions will make you understand and believe the future he predicts. He insists that the current financial turbulence will be dwarfed by the Biotech 'tsunami' that is coming.

Juan Enriquez was founding director of the Harvard Business School Life Sciences Project, and has published widely on technological and sociological topics. He played a role in reforming Mexico's domestic policy and is now a Managing Director at Excel Medical Ventures, a life sciences venture capital firm, and the chair and CEO of Biotechnology, a research and investment firm helping to fund new genomics firms.

Juan Enriquez is a broad thinker who studies the intersection of science, business and society. He thinks and writes about the profound changes that genomics and other life sciences will cause in business, technology, politics and society. He has a talent for bridging disciplines and deliver a coherent look ahead.

Click Mind-boggling science and the arrival of Homo evolutis

Click Why can't we grow new energy?

Click Tech evolution will eclipse the financial crisis

Click Decoding the future with genomics

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Living in the Present Moment - Here & Now

After a hectic working life, when I retired (which to me means, doing what I wish to do) I thought I'd learn to meditate - you know, sit down and discover stillness. Turn off the TV and any distractions; just sit and still your mind.

Well, that's not easy - have you tried it? Your "monkey mind" keeps jumping around, from the events of the past to the possibilities and problems of the future. Back and forth. Never settling in the present moment, the NOW.

I read lots of old books I had previously put on the shelf for just this time. I studied what the Dalai Lama had to say about meditation. I read about the different kinds of Indian Yoga. I started to practice "mindfulness" - living in the Now. I made this the topic of my speech at my local Toastmasters group. And they loved it!

My first Youtube video was also my first "guru" talk on this subject - how we can master our "monkey-minds" and start dwelling in the present moment - here and now.

Well, I made other videos - my poem "Bush Lied", written in March 2008, the fifth anniversary of the Iraq War, which was a minor hit (relatively speaking - over 1,000 views in the first few months).

Then I did a few video versions of my ISA InTech "Pinto's Points" - which were well received, though not too exciting. Heck, my guitar rendition of "Sioux City Sue" got more views. My videos of my grandson Siddhu doing magic, and learning to ride a bike, have become quite popular with our family, but not broadly viewed.

But, you know what? That first video, "Living in the Present Moment - Here and Now" continues to attract a much broader audience. It's view-count has exceeded all my other videos, and it continues to get several hits per day from all over the world. I suppose it might yet become a "viral spiral".

One feedback on the Youtube website says,

    "Something happened to me when I did this. I can't believe nobody is teaching us this at school. This is weird: I argued with my girlfriend yesterday but after practicing these instruction, my behavior suddenly felt stupid. I can't believe I was only doing nonsense for the last 17 years. Guys, let's do it, come on, spread the message everybody."
Hey, go view the video, and maybe it will "change your behavior". I'll appreciate your personal feedback. Directly, or on Youtube.

Click Living in the Present Moment - Here & Now

Click Jim Pinto's other videos

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Rodger Lovrenich [rlovrenich@yahoo.com] liked my column "Empty titles" on hierarchical labels:
    "Jim, you have finally done it! You generally provide insight, but your treatment of hierarchical labels exceeded all your previous accomplishments.

    "When I owned my own company, I was so appalled by the 'title game' that I carried two sets of business cards. One for trade shows, on which I gave myself the title 'Design Engineer'. The other was for banking and high level sales calls where I gave myself the title of 'President'. After all, those high level corporate officers would only deal seriously with people at their own level.

    "The best grade of folks I met at trade shows were the ones who stayed to chat at our sales booth with our 'Design Engineer'. I am most proud of that title.

    "While we are on the subject of hierarchical titles, I think it's really a symptom of a deeper emotion ingrained in the human psyche. Hierarchical titles and labels reflect an expectation of methodical advancement 'up the corporate ladder'. Of course this is to be awarded to the 'deserving' as compensation for outstanding performance in their existing positions.

    "Many professions and skills are regrettably NOT in the path to the top and persons who choose these professions should recognize this early so as to avoid disappointment in later life when they find themselves 'stuck in a well paying dead end job' as one of your previous responders lamented.

    "I reminisce regularly on the joy and satisfaction being an engineer gave me in my youth. Similar to your waking from a sleep story, I often awake from slumber in an agitated cold sweat thinking I must face another day as company president responsible for keeping jobs, covering payroll, meeting customer commitments, and endless meetings with well meaning people advising me on something they know nothing about except what they read in a trade journal written by a junior reporter.

    "If you ever feel the need of a promotion, may I suggest you give yourself the title 'Imperial Supreme Commander'. After that only the three letter title 'GOD' is left. Thanks again for your words of wisdom."

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Steve Ziker [steve.ziker@honeywell.com] waxes eloquent on his new Kindle-2 Amazon eBook:

    "I can't believe I beat Jim Pinto to a Gadget! My Kindle-2 arrived February 26th and I can't put it down. I usually carry several books with me on trips and now all I need is my Kindle-2.

    "You did not mention that you can load the Kindle 2 with MP3 Files and use the Kindle as an MP3 Player for background music while reading. It appears to have about 1.5 GB of available memory and book downloads seem to average 500KB for a 350 page paperback.

    "Compared to the original Kindle, the E-Paper Screen is much more readable with 16 grey shades; my only objection is the need for some illumination in dim or darkened areas. There is no backlight (saves on power consumption), but there's good low light readability. That said, the bright-light visibility is superb! No Glare or Washout issues like conventional LCD Displays. It's perfect for sitting outside and reading on nice sunny days. I think this is the device that will really bring E-Paper into the mainstream of handheld devices.

    "With the Whispernet turned off, I get an estimated 12-13 days of 2 hours per day usage (based on battery charge left after 4 days). And with Whispernet on and occasionally downloading media content, I get 4 days off the battery easily. And I can recharge the Kindle off of my laptop PC through the USB connection once removed from the AC Charger. The AC Charger, by the way, is Universal Voltage so all I need is a travel plug adapter when overseas.

    "There is one problem which has no immediate solution: Everyone around you will want to know what the Kindle 2 is and will want to borrow it to see how it looks, which tends to put a crimp on a spell of quiet reading!"

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Hank Shaver [HShaver@amkdrives.com] writes regarding our discussion about the American automation skills enigma:

    "One thing that I have noticed, is the inability of modern engineering students to think through a problem.

    "We work with interns from the local university and while they are fairly intelligent, they seem to lack problem solving ability, a necessary asset in any engineering job. I will show them puzzles or give them a real world problem to solve and they will look at it for a few minutes and then ask what the answer is. They have all the requisite knowledge to solve the problem but seem to have trouble in systematically figuring it out. Or maybe they just get bored.

    "Along with the facts, schools need to teach students to think and put the facts together (maybe dangerous). And this needs to start when they are young. Eighty percent of system design is determining how everything is going to work and if someone doesn't want to put the effort in, they'll go get a job as a policeman somewhere.

    "Education is the key, and getting students interested in how things work should be a prime directive."

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