JimPinto.com - Connections for Growth & Success™
No. 288 : 8 December 2010

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

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Whither Rockwell Automation?

In spite of my predictions over the years, Rockwell Automation remains an independent company and continues to make good progress.

Registered attendance at the Process Solutions User Group on Nov. 1-2 was over 600, and a crowd of more than 11,000 attended the two-day Rockwell Automation Fair trade show Nov. 3-4 with 10 large Rockwell exhibits and 98 partner booths.

Rockwell strategy is driven primarily by the convergence of IT and manufacturing, and incorporates energy, sustainability and safety. The platform is Integrated Architecture: the 4 cornerstones are Control Logix; FactoryTalk Software; EthernetIP and System Safety. The partnerships with Cisco and Endress+Hauser were highlighted with prominence at the exhibition.

In his interview with Automation World Editor Gary Mintchell, Keith Nosbusch, CEO, stressed that Manufacturing is important. It's not just about jobs; it's about the overall strength of the economy. A strong manufacturing sector is needed for wealth creation.

The usually negative Rockwell weblogs turned positive, as Rockwell reported 2010 growth of 10%. The consistent opinion is that Rockwell will get back to 2008 revenue levels in 2011.

Currently Exports account for 50% of sales, and Keith Nosbusch is looking for 60%, but not at the expense of growth in the US, where Rockwell is currently the leader, according to ARC.

In a flat market organic growth is difficult. To achieve growth Rockwell must make major acquisitions or itself be acquired. But, in press interviews, questions about acquisitions, or being acquired, were consistently avoided.

If you review my article on "Top-tier Growth Paradigms" (see weblink below) you'll note that Rockwell (and Invensys) are the only two major independent automation companies at the critical Phase-5 tier: "too small to be big, and too big to be small". This is why I keep repeating my as-yet-unfulfilled predictions.

Click Rockwell's Automation Fair Draws a Crowd

Click Gary Mintchell - Thousands Descend On Rockwell's Automation Fair

Click Top-tier growth paradigms

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Swim Upstream in a Down Market

Many companies think of an economic downturn as a time to tighten belts and safeguard cash reserves. The mindset becomes survival, not growth - the bunker mentality. The irony is that this leaves a company in a vulnerable position, organizationally and in the marketplace.

The time to develop significant competitive advantage and increase market share is while the competition is struggling. During lean times, advertising budgets are often the first to be cut back. The fact is that advertising is important for growth. While competitors tighten their belts and cut marketing dollars, winners gain more mind share for their money by maintaining, or even increasing, media advertising.

Research-and-development budgets are usually reduced to just sustaining support for old products. Buck the trend by ramping up R&D, to enable growth in new areas and yields strong advantages in coming years.

Look for adaptations of core technology strengths for applications in new markets. Stimulate "outside-the-box" thinking and creativity. Develop and promote new features and functions using iPad, iPhone and Droid apps.

Stay away from price wars. Confidence and value perception are far more important than price. It's important to keep a balanced products and services portfolio. Don't simply be forced into the strait-jacket of current pricing, margins and volume - look for new products in markets with higher volumes.

Provide extra support for good customers during bad times; this creates a bond that is hard to break. Don't waste resources on unprofitable customers. Look for competitors' customers, particularly those with attractive growth prospects and strong balance sheets. Develop tactics to win their business.

Weak competitors often lay off good employees, and the remaining good people are often disenchanted. Capitalize on the opportunity to identify and attract talented employees.

A side note to employees who have been or have the prospect of being "let go" during lean times. Don't simply look for another job in a similar company or business. It will lead you along the same path with a similar result. Use this opportunity to review your view of the world in the light of new technology and burgeoning markets. Seek something that can really get your juices flowing.

The path to success in a down-market is to swim upstream.

Click Automation World Nov. 2010 - Swim Upstream in a Down Market

Click Selling upstream in a down market

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The post-industrial economy

Our discussions of America's jobless malaise and related topics generated lots of insights and discussions.

David Bell [dbell.greyskies@shaw.ca] from Canada wrote that I was quoting old metrics, suited to the still industrializing world, not to the post-industrial society. His points resonate with me, and I'm including his complete text as a guest-editorial:

    "The ballistics, the dynamics of a post-industrial economy are not captured by the old product & service metrics. In the East they're selling washing machines to people who have none. Easy sell. That's the industrial economy. In the West we're selling more efficient and stylish washing machines to folks with an 8 year old machine that works fine. That's post-industrial.

    "Most of us can remember the value proposition for automation in the 1980's. Buy this $3M system from us and you can produce twice as much product with a reduced headcount. The number of men on a newsprint machine went from 40 in 1980 to 4 in 1990. The bonus? Machine speed jumped from 2500 feet/min. to 6000 feet/min.

    "I remember what a revelation it was to start doing manufacturing budgets in 1981 on a PC with Lotus 123 instead of a calculator. 3 days work in 3 hours. What do you think is the productivity increase when moving from Office 2007 to Office 2010?

    "And we wonder where the margins are? That's value on the front end. What about the back end?

    "The truth is that China got their hands on manufacturing after it had been picked clean like a bone. Don't believe me? Talk with contract manufacturers. They're looking at 2.5% bottom lines.

    "We need to recognize the astonishing impact automation has on the market. Variable cost has been marginalized. Fixed cost has gone through the roof. But what does that mean?

    1. The competition today is for capital. Dollars to drive new factories. The factory is the product.
    2. 66% of employment was related to manufacturing in 1960. Today it's about 6%.
    3. We're (officially) reporting about 7% unemployment in Canada. But studies show that 80% of "knowledge workers" who are unemployed and looking for jobs, never report to the government funded employment agencies for help (therefore never counted). Which means our official 'fully unemployed' rate in Canada is 35%. If you count biochemists driving taxis, it's north of 60% and climbing. And the US, by all accounts, is worse.

    "What's happening is that industrial metrics have become progressively less relevant. We should be measuring bandwidth.

    "Trying to reduce the costs of healthcare means we're trying to stifle revenue growth of the biggest business sector on the planet. Is that good or bad?

    "YouTube uploads are doubling every year; the current rate is the equivalent of 176,000 feature length movies being uploaded every week. Is that a product or service?

    "When the economy heats up, manufacturers invest in better automation and lay off workers. And 'productivity', the darling child of economics, goes up.

    "But the consumer economy, the poster child of automation, starves. Don't get me wrong. I'm proud of what we've accomplished. But we need to get moving again."

Click The Post Industrial Economy

Click The post-industrial Society

Click America's Fall into Post-Industrialism

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Future workforce - Crowd-sourcing

In the post-industrial economy, the way jobs are distributed is changing completely. Factory-based and central-office jobs are steadily declining. The old, punch-the-time-clock type of factory work is a relic of a bygone age. And nobody needs a central office to read and compose documents, send email or browse the Internet. In fact, when asked where was the place where they felt most productive, most people said, "Not the office!"

Going too are the old ways of looking for a job - sending out resumes which list previous jobs and decades of past experience. Today, hiring involves online research on sites like LinkedIn and Facebook. Articles, presentations and papers by job candidates are found online. Applicants are evaluated based on related, recent work, not on which college they attended a decade ago.

People are now responsible for marketing themselves, negotiating their rates and deciding what kind of work they want to pursue. Everyone who has good, related experience has access to jobs. It's the new digital meritocracy.

Crowdsourcing is the act of outsourcing tasks, traditionally done by employees or local contractors, to an undefined group of people (a crowd), through an open call. This gathers those who are most fit to perform tasks, and contribute with the most relevant and fresh ideas, not only to do the work, but enhance the result.

As the amount of digital work increases and the amount of physical work decreases, our notions of employment and work change profoundly. Digital work doesn't require roads and factories; it requires an Internet connection with equipment that people have access to in their homes. The need for industrial-era offices, supervisors and employment arrangements diminishes.

Companies are able to access, in real-time, the perfect person for a given job - the one who will do the best job, enjoy it the most, or do it the fastest. This changes the landscape, and the definition of "work".

This is the path to lower unemployment. Manufacturing and office automation has led to some jobs becoming obsolete. But, new kinds of automation can actually drop unemployment rates. They reduce the amount of time it takes unemployed people to find jobs. Technology has the power to create a much more efficient market, connecting job-seekers to employers instantly. Today, most jobs are found via the Internet.

For the last decade or so, companies have been looking offshore for cheap labor. Today, it doesn't matter where work originates - as long as the suppliers are connected via the Internet. This is the future of work.

Click Automation World - Future Workforce

Click The Digital Meritocracy

Click Wired - The Rise of Crowdsourcing

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Rise Of Personal Robots

There have been dreams of personal robots for decades, but they've remained toys with not much utility. Now the confluences of several different technologies are evolving personal robots to a new level.

Industrial robots are used for specialized manufacturing; by contrast, personal robots are useful for automation of repetitive or menial jobs in the home.

Just as PCs revolutionized personal productivity, personal robots are changing home productivity. Robots like Honda's ASIMO show major improvements in motion planning, computer vision, natural language processing, and automated reasoning, making them useful "servants". Mind you, ASIMO costs about $1 million; but the price will drop substantially when mass production begins.

You may remember that I got my own Roomba, the home vacuum-cleaning robot in March 2005. Well, the company iRobots, now has $400M annual sales, and is publicly traded with market-cap of $500M. They offer home robots at prices around $250 for home jobs like cleaning pools to scouring gutters. Plus about 40% of their revenues are military jobs such as defusing bombs in war-zones and dangerous tasks like looking for survivors amidst earthquake rubble.

Robot toys are quickly becoming more sophisticated. Hammacher Schlemmer sells a $199 R2-D2 replica, which chirps and beeps as it follows humans around the house, obeys 40 voice commands and plays games, and even acts as a guard robot.

Pleo, a dinosaur "life form" is a $350 companion robot. Pleo may be the first of many personal robots which offer people a level of empathetic companionship - chatting, snuggling up, rubbing up to get attention, and cooing when stroked.

Conversational robots recognize, understand, and respond to human facial features, becoming "aware". In Japan, this type of robot companion is already being sold as robot-nurses for the elderly.

Robots are an intriguing technology that can straddle both the physical and social world. Inspired by animal and human behavior, the goal is to build robotic creatures with a "living" presence, to gain a better understanding of how humans will interact with this new kind of technology.

People will physically interact with robots, communicate with them, understand them, teach them, all in familiar human terms. Ultimately, personal robots will have the social savvy, physical adeptness, and everyday common sense to partake in everyone's daily lives in useful and rewarding ways.

Click Tomorrow's personal robots

Click Rise Of The Personal Robot

Click Practical Robots for the Home (eNews March 2005):

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Michael Barrett [michbarr@att.net] calls himself "Bayou-plumber" and sent this to "challenge the ole brain":
    "This country is really in a very precarious place. Unfortunately, from my view down here in the swamps of Louisiana, we do not see a way out. The level of corruption in our leaders, our financial institutions and, worst of all, in our judicial system, is just not getting things done.

    "An example of this is that we lost over 30% value in the stock market and more than that in retirement accounts in 2008, and no one goes to jail for the manipulation of the bubbles created with illegal fraud by the whole industry. When the savings and loan scandal bubble burst in the '80s and '90s, 1300 white-collar thieves went to jail. Now, NOT ONE has gone to jail. We are allowing fraud to be committed at the highest levels of our government, with NO legal action.

    "We are getting distracted by the media with all kinds of chaos and drama stories for one thing then another, and doing nothing about the total breakdown of our judicial institutions. When a society does not enforce its own rules and regulations, it is doomed.

    "This is crazy, and not getting better. Hope I'm all wrong and none of this comes to pass."

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John Cochrane [JCochrane@commtest.co.nz] from New Zealand, disagreed with my comments on outdated management practices:

    "As our company continues to grow we are faced with a dilemma - how to remain agile while becoming more formal, and dare I say, bureaucratic.

    "Our experience is that time-tested (aka outdated) management practices still hold enormous value for companies of all sizes, and at different stages of evolution. However, what we feel is the nemesis of true innovation is the focus on short-term revenue.

    "Corporate bureaucracy (as applied to innovation) has its place to ensure that the most valuable projects receive funding. Where the wheels fall off is when the criteria for 'value' is placed on short-term returns, rather than long term durable company value; returns that may be some years away.

    "I believe that short-term thinking is the root of the problem; shareholders are no longer stakeholders. I ask, what would happen if all corporate investors, large and small, private and institutional, were required to hold on to shares for a minimum of 3 to 5 years? If shareholders once again became true long-term stakeholders, I believe innovation would flourish again inside some of today's sleeping giants.

    "The reason small start-ups succeed and prosper, while some of the 'old giants' collapse, is the difference in their respective horizons. Start up companies most often have founders who are not solely driven by next-quarter earnings. When/if corporate boards begin focusing on long-term durable value again, then innovation will thrive.

    "In the mean time, as long as they remain asleep at the wheel, it provides fantastic opportunities for smaller disruptive companies, like the one I am honored to work with, to dance circles around some of the old, corporate giants."

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Martin Greenwood [greenwme@iinet.net.au] from Australia had this to say about the scourge of email Spam:

    "I have said it before and I'll say it again. (You came oh so close to saying it yourself). The solution to Spam is to charge EVERYONE a small fee (cents, or pennies I think you call them) for sending an e-mail message. Genuine e-mail users will not be unduly affected - especially if their ISP reduces other charges accordingly.

    "But most (not all) of the Spammers - who rely on sending out millions of messages, in the hope a handful escape both the filters and recipients common sense - will be priced out of business.

    "For your newsletter, you will only have to charge a dollar a year to each subscriber (who could object to that) and you will not only cover your costs but make a well deserved profit!

    "Junk snail mail exists but is not a serious problem, because the cost structure of snail mail is right - the SENDER pays."

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