JimPinto.com - Connections for Growth & Success™
No. 196 : 10 November 2005

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

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ABB posts strong Q3 results

After a tough few years, ABB is generating a strong recovery. Bookings, revenues and earnings rose sharply in Q3 2005 and ABB is on target for a strong fiscal 2005.

In a traditionally weak Q3, ABB revenue climbed 13%, bookings jumped 15%, EBIT (earnings before interest and taxes) climbed 81%. While operating cash flow performance wasn't quite that strong, 20% better isn't bad and ABB is free-cash-flow positive YTD.

ABB's power technology business was definitely stronger than automation for this quarter. Sales were up 15% (versus 10%), EBIT was up 89% (versus 21%), and orders were up 30% (versus 9%). Automation is still larger in terms of revenue, new orders, and margins. Automation bookings increased 9% to $2,982 million. Revenues jumped 10% to $2,944 million, with EBIT of 11%.

Fred Kindle, ABB President & CEO suggested that positive market conditions and strong focus on execution are putting ABB on track to meet or exceed the profit margin target for the 2005 year.

Click ABB shines on strong Q3

Click ABB May Regain Investment Grade Status

Click The NEW ABB Corporate Culture

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ISA EXPO Chicago Report

The ISA Exhibition in Chicago, October 2005 registered 10,532 attendees, a 27.5% decline compared to 2004. To most neutral observers, it seemed more like a networking event rather than an industry exhibition.

And the penguins were there, perched atop the melting ice-berg: the past Presidents and old-boys club congregated faithfully at the annual dinner and award ceremonies every year, back-slapping and basking in past glories. I didn't attend.

ARC Advisory Group reports that a large percentage of attendees came from offshore locations seeking sales partners. ARC wrote: "The health of the health of the automation industry is much better than what ISA Expo 2005 presented."

Some exhibitors were pleased with their booth traffic and the sales leads that were generated. But, to many visitors it was the same old story - vendors visiting each others' booth to see what was new. And there was nothing new - all the same-old, same-old stuff. (See a major end-user's e-feedback below).

ISA leadership working bravely to infuse new life into the Society that still has great value as a Standards coordinator and automation industry bellwether. 2005 President Don Zee and 2006 President Ken Baker have contributed significant amounts of their time and effort to organize and implement major changes. And the search is still on for a new Executive Director.

I'm happy to report a ray of sunshine: industry guru Dick Morley has been appointed as "Innovation Czar" and will be embarking on an innovation initiative that will culminate in "Innovation Alley" at next year's ISA Expo. The goal is to give attendees a sense of where technology and industrial application are headed in the future.

I have known Dick Morley for ages and have always been impressed with his imagination, positive attitude and pragmatic approach to solutions that work. He's now engaged with the growth and success of ISA, and you'll see a steady stream of practical ideas emerge. Dick has ways to get hordes of young engineers involved - watch for that to happen.

Dick insists that he has "no silver bullets". But I'm convinced that he has at least a couple up his sleeve to stimulate new growth at ISA.

Click ARC - Field Report: ISA Expo 2005

Click Morley: ISA working, but challenges exist

Click Innovation Alley to Debut at ISA EXPO 2006

Click ISA at the crossroads - Jim Pinto's 6-point plan

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Automation Manufacturers turn to Services for growth

In today's competitive global markets, users are scrambling to reduce costs and improve asset utilization. Many have even eliminated engineering and maintenance services, preferring to outsource these functions.

Reacting to this demand, automation suppliers are expanding their service offerings to "total solutions" responsibility, looking for growth beyond just products.

Major suppliers must recognize that their service offerings put them into direct competition with some of their best customers - Systems Integrators.

Large suppliers (Emerson, Honeywell, Rockwell, Siemens) push for global contract relationships that small suppliers cannot offer. But developing local talent to provide high-quality services for large global customers is expensive. It's a slippery slope.

Click Oct. 2005 Automation World - Services, growth on a slippery slope

Click Automation Systems Integration - the realm of specialists

Click 'Coopetition' spreads in the system integration industry

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Book: The Future of Work

I met Tom Malone and heard him speak at the Accelerating Change Conference at Stanford University in California, Oct. 2005. He was there to introduce his new book "The Future of Work: How the New Order of Business Will Shape Your Organization, Your Management Style and Your Life."

Thomas Malone is Professor of Information Systems at the MIT Sloan School of Management, with several additional information science guru credentials. The theme of his book is that decentralization and employee empowerment will be the essence of all future organizations.

Tom Malone draws a big picture. Take a moment to follow this vision - it'll make you think differently about the way you work.

For millennia, all human societies were organized as small, autonomous groups called "bands". Then came the rise of bigger and bigger, more centralized societies called "kingdoms". In just the last 200 years a new way of organizing human society has expanded rapidly: democracy.

Each of these stages can be explained by a change in a single factor - the cost of communications. Writing is what enabled hierarchically organized kingdoms to arise. Printing led to democracy.

The development of business organizations follows this same pattern. Until a couple hundred years ago businesses were still organized like bands. When new communications technologies, like the telegraph and telephone and the Xerox machine, made communications cheap enough to coordinate larger groups of people, this gave rise to the centralized corporations - the "kingdoms" of the business world.

Near the end of the 20th century, it became possible for the first time to exchange the kind of detailed information necessary to coordinate a business on a very large scale, even as lots of individuals made decisions for themselves. When communications costs fell, it became possible for vastly more people to be informed well enough to make decisions, instead of just following orders from superiors. Indeed, many "supervisors" became obsolete.

For a long time, successful businesses succeeded by getting bigger and more centralized. But now the economic benefits of bigness and the human benefits of smallness can be combined, with significant improvements in effectiveness. The best knowledge-workers can't just be ordered around - they're stimulated by the freedom to innovate and contribute to the "democracy" of business. That's the wave of the future that's revolutionizing business in this new century.

I must tell you: after I heard Tom Malone's talk during ACS 2005 at Stanford University in October, I immediately walked over to the Stanford bookstore to buy a copy of his book, "The Future of Work". I recommend it to you - go read it!

Click MIT - Future of Work webpage

Click Business Week - The Future of work:

Click Tom Malone - Homepage

Click Review & buy "Future of Work" on Amazon.com

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Editorial - stop the polarization

You know, as soon as I discuss something uncomfortable (like Poverty in the last issue) some people respond with partisan labels, often used as epithets. I hate labels - they bypass the individual's thinking process.

Hurricane Katrina did more than drown New Orleans. It also exposed how water-logged US partisan politics has become. The elections this week showed what people are thinking: Stop the Polarization!

Dominated by narrow, self-interested elites, America's political parties have built a dysfunctional system that's run aground on the constant conflict between two flawed ideologies.

Conservative Republican attitudes toward planning, conservation and investment in basic infrastructure clearly contributed to the tragedy along the Gulf. But so did the failures of the corrupt, inefficient liberal Democratic administrations that have controlled cities like New Orleans for generations.

Neither of the major parties seems equipped to deal with the major challenges that America faces. A new political model is needed, one that rejects the narrow and sectarian for a broader notion of national interest, a politics of reason rather than one that harps on peoples' fears. We need something like the early 20th-century Progressives.

The early Progressive movement was not primarily from the "left". In fact, Progressives believed in a nonpartisan approach to governance. They were Democrats like Woodrow Wilson and Republicans like Theodore Roosevelt. Later 20th century Progressives included California governors Earl Warren, a Republican, and Pat Brown, a Democrat.

Hey, till a new 21st Century label comes along, please label me as a "Progressive".

Click Joel Kotkin - The Era to Bring Back

Click US News - An End to Polarization?

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My neighbor Wade Lovell [success@ceoathome.com] wonders whether it matters what "label" he carries, when he tries to make a difference in the world:
    "I've always been a registered Republican. I am a staunch defender of the USA and of Capitalism. I love my country, support our troops and wish we had a different President.

    "Many would call me a 'bleeding liberal' on poverty and excessive wealth, on multi-generational debt, on war, and on human exploitation - strip clubs in Chicago, porn on the Internet, brothels in Las Vegas, human trafficking around the world.

    "As long as those in power consider those not in power to be 'little people' we will have Czars like Scooter Libby (and his White House handlers) defying the laws that most of us accept and abide by.

    "As long as leaders differentiate themselves in their own minds, they can victimize others without guilt. When a politician, an athlete, a movie star or a senior executive has a drug problem they go to rehab. When 'little people' have the same problems, they go to jail.

    "My wife and I were responsible for contributing over 10,000 meals in Iraq immediately after the American invasion. Some of the people we called upon to assist us saw this as a betrayal of our country. We saw it as preservation of life. We saw it as an opportunity to right a wrong of war visited upon the innocent "have nots" of Iraq. We saw this as helping people.

    "We also gave 1,100 meals right here at home to the Pala Indian reservation this year. It turns out that these meals went to immigrant workers on the reservation who the Indians were treating as second class citizens. After 200 years of poor treatment, the Indians, were treating the migrant workers without the dignity they themselves had sought for so long.

    "We won't fix the ills of the world by limiting corporate payouts; but we could start there. We should not stop at the top. Harvard cannot find a money manager because, at $7.2 million a year, it doesn't pay enough to attract a qualified person. When I tried to contact my old boss from Goldman Sachs, to be a reference on my application for a job at that firm, I was wondering what I would do with the $6+ million a year if I got the job. I clearly would not need that much for myself or my extended family. I don't understand why others feel differently.

    "At heart, I'm not a bleeding liberal, a die hard Republican, a Christian conservative or a free marketer. I'm really just a 'little person' trying to make a difference."

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After my article, "Technology, globalization work in Ireland" was published last week by InTech eNews (also eNews 12 July 2005) Mark McKechnie [mark.mckechnie@bms.com] from Ireland responded proudly:

    "There is two vital components that have contributed to Ireland's success - 'Knowledge and Innovation'. I am very much part of that success as an Automation Manager - our facility has been nominated as the launch facility for all global new products.

    "Ireland's competitiveness is not just based on tax benefits and education but knowledge, innovation, flexibility and a burning desire to succeed. The country is full of young, enthusiastic and highly motivated people, which makes it unique in Europe. It has the youngest population in Europe - over 40% under the age of 25.

    "To quote Joe Gantly, Apple Computer European Operations:

      'The key asset of a knowledge based economy is people: smart flexible, educated, proficient, globally aware. There is a fundamental desire for people in Ireland to succeed.'

    "Bernard Collins VP International Operations for Boston Scientific:

      'Irish workers are not just good at accumulating knowledge they are also very good at applying it. There is an eagerness to get things done right first time, and to do it faster and better. The interest in continuous knowledge building and learning by the Irish workforce is a keen competitive advantage that enables them to be multi functional across organization boundaries.'

    "Ireland as a base for Science & Technology has been bolstered by the knowledge and innovation of the Irish workforce. In 2003 Ireland had the highest amount of science and technology graduates in Europe with 23.2 per thousand between the ages of 20-29.

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A major end-user (name withheld by request) reported on his visit to the ISA Expo in Chicago (Oct. 24-26 2005):

    "The Exhibition was small; it didn't even fill up the whole top floor of McCormick Place. Most of the booths were not much bigger then what might be found at a local table top show. Many of the big players were no-shows or minimal shows, including Honeywell, Emerson and Schneider. I was told by several people "this is an instrumentation show, not a DCS show".

    "My view is that the ISA show is in a downward spiral, and will only exist a couple more years. It's become a social gathering for old engineers and a tutorial symposium for young engineers. Not too many years ago, companies worked hard to get products and announcements ready to launch at the ISA SHOW. Now they don't bother.

    "The ISA Expo is still the only forum for the small manufacturer to get some exposure, but the big boys have drifted away. In terms of technology introduced - that was the most disappointing thing. I did not see one new innovative thing at the show. Just some new and improved product lines, but nothing really new.

    "Customer traffic was light. There were never any crowds and as a result there was no energy being generated. Last year, Houston had probably 4 times the number of customers, maybe higher.

    "So, the Expo has to also be a major item of concern. I haven't heard the results of Dick Morley's discussion with ISA Executive committee, so I can only hope that these very intelligent people begin to make hard decision about where they expect to be in the future so that they can determine how they will get there."

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