JimPinto.com - Connections for Growth & Success™
No. 98 : September 15, 2002

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

  • Artificial Intelligence - hype or revolution?
  • The scientific search for human longevity
  • Automation : ABB - Centerman out, Dormann pushes re-structure
  • GE's Jack Welch - fall of an icon
  • New age corporate & investment acronyms
  • eFeedback:
    • What JimPinto.com is doing for the automation industry
    • eBooks vs. trade publications
    • More weblogs please!

Artificial Intelligence - hype or revolution?

A spate of books that describe AI breakthroughs are out, or due shortly.

Bill Joy, Sun Microsystems' chief scientist, who wrote in Wired magazine about a future in which robots are the dominant form of life on earth, has a book in preparation. Jeff Hawkins, cofounder of Handspring, the PDA manufacturer, is working on a book about widespread AI; Tom Mitchell, professor of AI at Carnegie Mellon University is about to present his vision of the future.

AI pioneer and entrepreneur Ray Kurzweil is working on his book, "The Singularity Is Near" a sequel to his previous best-seller, "The Age of Spiritual Machines: When Computers Exceed Human Intelligence" (see hotlink below).

Rodney Brooks is director of MIT's AI Lab; his new book - "Flesh and Machines: How Robots Will Change Us " - promises that machines will have emotions, desires, fears, loves and pride (see hotlink below).

These gurus clearly believe that AI is on the brink of a major comeback. They're predicting that personal robotic servants, computers that can program themselves, and robots that cost a fraction of a human worker - all within the next 20 years.

An Israeli company Ai Research was recently funded with $4m to create a new form of life with 'Virtual Children' using technology that allows everyday language communication with computers.

San Francisco-based startup Emergent Minds is applying for government funding in an attempt to build neural networks that can learn and grow like living beings, with amazing commercial applications.

A recent RedHerring magazine article pooh-poohs all this as hype. In this essay, Geoffrey James insists that AI is a "technological backwater" and the business prospects simply don't add up. He scoffs that AI has been coming since the '60s and the AI dreams - and business opportunities - are likely to remain more science fiction than science fact.

But, the AI pundits continue to predict that generalized AI will be achieved within 20 years. The brilliant and irrepressible Ray Kurzweil debunks RedHerring eloquently with his own arguments. It will always be easy to scoff at AI as long as there are tasks at which humans are better, but the many derivatives of AI research are becoming increasingly vital to our economy and civilization.

Virtually every industry extensively uses intelligent algorithms, the trend now is that the "narrowness" of the intelligence of AI systems is becoming less narrow, with many applications beginning to combine multiple methodologies. "Strong AI" represents the culmination of these ongoing and accelerating trends.

The Web site Longbets.org has published 11 bets to sharpen long-term thinking on issues of social or scientific significance. The biggest bet (so far): $10,000. Ray Kurzweil bets Mitchell Kapor, the founder of Lotus Development, that a computer or 'machine intelligence' will pass the Turing test (be able to successfully impersonate a human) by 2029.

Click RedHerring - Out of their minds

Click Ray Kurzweil - RedHerring has a myopic perspective on AI

Click Long Bets - Accountable predictions

Click SF Based AI startup - Emergent Minds

Click Ray Kurzweil: The Age of Spiritual Machines

Click Rodney Brooks - Flesh & Machines: How robots will change us

The scientific search for human longevity

The first longevity revolution occurred in the early 20th century, as infant mortality declined and infectious diseases were conquered. More people now enjoy the opportunity to become old. Today we are at the cusp of the second longevity revolution, the actual postponement of old age.

What is aging? My friend who is 80-something described it this way, "I feel like a young man in constant poor health." Aging is accompanied by lots of simultaneous changes - graying hair, thinning bones, weakening muscles, failing immune systems. So far, researchers have not figured out whether those changes are aging itself or just symptoms of some more general process of decay.

Average human life expectancy has been increasing at 2 1/2 years per decade for the last 150 years. Today it is about 76 years. At this rate, it will reach 100 in six decades. But, most scientists agree that major advances will cause 20- to 40-year jumps in longevity to occur in this century.

Two years ago, Aubrey de Grey wrote in the British Sunday Times, "A dramatic increase in lifespan is inevitable. It's an engineering project now, not a scientific one."

The defining political conflict of the 21st century will be the battle over life and death. On one side there are those who counsel humanity to quietly accept our morbid fate and go gently. On the other side are those who yearn to extend the enjoyment of healthy life to as many as possible for as long as possible.

Read this excellent and well-written article by Ronald Bailey.

Click Forever Young - The new scientific search for immortality

Click Stephen Austad's book - Why we age: what science is discovering

ABB: Centerman out - Dormann pushes re-structure

Last week, (just after I had clicked the latest eNews out into cyberspace) ABB surprised everyone when it replaced CEO Joergen Centerman with Chairman Juergen Dormann. Why Centerman made an abrupt departure was not disclosed - Dormann insisted that the reasons were "pretty complex".

One ABB insider shrugged, "The Swedish social-experiment called ABB has failed. I still wince at the thought of all the management-concept discussions that we had to suffer through."

ABB is still in the throes of a restructuring phase which is expected to cost $ 500 million and was started last year. This has cut 12,000 jobs and supposedly streamlined operations, aiming to give the company a consumer-oriented strategy. The revamping was expected to be finished in December.

Under Dormann, ABB's disposal/restructuring program will pick up speed. For years ABB has tried to help their products & services by providing financing (to customers who don't have the capital), while also doing a value-add based on that financing. When a sizable order was placed with ABB, the typical follow-up question was, "would you like financing with that?" (ala the McDonald's mantra; "would you like fries with that?").

But ABB is NOT a bank, and over the past few years they've clearly demonstrated this by losing their shirts. Also, auditors are beginning to look more closely at "creative financing packages".

Jurgen Dormann has a long and successful history of shedding non-core business elements. ABB's financing arm fit this category, so it was sold to GE for $2.3b as part of an effort to shrink the hole in the ABB balance sheet; the cash inflow will reduce debt of $5.2b to $ 2.9b. Next up will be the Oil, Gas & PetroChem business.

Mr. Dormann said the company is on track to dispose of its Building Systems unit and real estate in Switzerland. But ABB isn't considering selling any large units or even whole divisions in addition to that.

Pinto Point: Centerman was always in over his head and he couldn't pull off the turn-around that was expected. The general impression is that Dormann is straight forward and very results-oriented. He'll quickly get rid of ABB's old matrix structure and Byzantine-like organization. The management survivors had better get their acts together, and fast - or Dormann will eat them for lunch.

Click ABB Appoints Chairman Dormann as New Chief Executive

Click ABB's New CEO Dormann Wants to Accelerate Restructuring Process

GE's Jack Welch - fall of an icon

The business icon that was Jack Welch has fallen. A messy personal life has exposed the plush post-retirement perks he enjoys and most people, even CEOs, are appalled.

On Dec. 20, 1996, Jack Welch settled on his post-retirement consulting agreement with GE. It included a salary of $86,000 for his first 30 days of consulting work and $17,000 for every day thereafter. Also in the agreement were provisions for access to aircrafts, cars, offices, apartments and financial planning services. Further, GE agreed to reimburse him for "reasonable travel and living expenses" which he incurs because of his position as retired chairman of the board and chief executive.

For Jack, this agreement looked wonderful. After a year, it's still impossible to separate the man from the company - so, everything is a retirement expense. It was fine too for Welch's wife, Jane - before Suzy that is.

After a 13-year marriage, following the revelation of Jack's affair with former HBR editor Suzy Wetlaufer, the Welches are getting a divorce. In court Jane, the woman scorned, disclosed details of the expenses covered by GE during Jack's employment and after. They include tickets for the New York Knicks, the US Open and Wimbledon tennis tournaments, Yankees and Red Sox games and other leisure activities. GE also picks up all costs associated with Jack's NY apartment, $80,000-a-month, plus wine and food, laundry, toiletries and newspapers.

Most people are surprised, and even shocked, that GE failed to disclose the extent of Jack's perks. The lavish pay packages and extras for recently ousted corporate bigwigs - Dennis Kozslowski of Tyco, Bernie Ebbers of WorldCom, and others are now being held up as gross improprieties. Unfortunately for GE, the details of Jack's golden handshake came out in a courtroom, and not the boardroom.

Jack Welch has descended from America's loftiest executive perch directly into tabloid hell. On Sept. 7, the one-year anniversary of his retirement, the front page of the New York Daily News featured his smiling mugshot under the headline: "Greed!" Jack Welch, once crowned the "Manager of the Century," has become a target of resentment and revisionism.

Jack's response to the flap over his perks is, in essence: I deserve them. "During my full tenure," he boasted, "GE's market capitalization increased by $400 billion, with shareowners, employees, retirees, and the like benefiting greatly." Of course, he was first in line on payday, retiring with $880 million in GE shares.

It's a pity the icon that was Jack Welch had to shatter this way.

Click GE Should Have Revealed Welch's Deal

Click Jack Welch: Fall of an Icon

New Age corporate and investment acronyms

From my friend Dr. Ted Mohns, who seems to have a knack for coming up with this kind of thing:
  • CEO: chief embezzlement officer.
  • CFO: corporate fraud officer.
  • P/E: parole entitlement.
  • EPS: eventual prison sentence.
  • BULL MARKET: A random market movement causing an investor to mistake himself for a financial genius.
  • BEAR MARKET: A 6 to 18-month period when the kids get no allowance, the wife gets no jewelry, and the husband gets no sex.
  • MOMENTUM INVESTING: The fine art of buying high and selling low.
  • VALUE INVESTING: The art of buying low and selling lower.
  • P/E RATIO: The percentage of investors wetting their pants as the market keeps crashing.
  • BUY, BUY: A flight attendant making market recommendations as you step off the plane.
  • STANDARD&POOR: Your life in a nutshell.
  • STOCK ANALYST: Idiot who just downgraded your stock.
  • FINANCIAL PLANNER: A guy who actually remembers his wallet when he runs to the 7-11 for toilet paper and cigarettes.
  • MARKET CORRECTION: The day after you buy stocks.
  • CASH FLOW: The movement your money makes as it disappears down the toilet.
  • WINDOWS 2000: What you jump out of when you're the sucker that bought Yahoo @ $240 per share.
  • YAHOO: What you yell after selling it to some poor sucker for $240 per share.
  • INSTITUTIONAL INVESTOR: Someone who has owned equities for the last two years and who's now locked up long-term in a hospital
  • PROFIT: Religious guy who talks to God


Roy Slavin [royslavin@cox.net] ex-CEO of Wonderware, Siemens Industrial Automation and other prominent US automation companies, wrote:
    "Jim, you are really doing a service for what's left of the industrial automation industry. Your analysis of most issues is compelling. I worked in the industry for 30 years and have watched with utter despair as dynamic, creative, entrepreneurial-based companies have been gobbled up and destroyed by large, clueless corporate entities. The destruction of those companies lays bare the idiotic notion of 'creative destruction'. We both know lots of good knowledgeable people who have been 'down-sized' because the people who run those companies have no idea what they are doing.

    "I think your site gives many people a place to vent. You pay more attention to them than their own managers. You probably know more about their business than their own managers - which touches the core issue. Most of the people who manage these companies know nothing about the product, customers, industry, or even fundamental technology. The clueless CEO's are hired by Boards who know even less. It is truly the blind leading the blind.

    "By far the worst group of idiots in the industry are at Invensys and Tyco. They have done more to destroy the industry than all the others combined. Did you know that Allen 'Jerko' and Dennis 'Kos-liar-ski' started their careers at the same company where they learned their financial engineering skills? The 'real', behind-the -scenes story of the BTR merger and Baan acquisition has never been told - it is too unbelievable. The utter destruction of AMP, Potter and Brumfield (Siemens electro-mechanical group), et al that were captured by Tyco is sinful. Unfettered greed and ego is frightening and sickening to behold.

    "Almost every person working at those companies HATE management. They have endured endless cost cuttings, endless reorganizations, endless consultants, endless crap. The only thing they haven't had is good management: leaders who know something about the products, industry, technology. What are the people who are stuck in those companies to do? The only practical solution is to simply stop caring. How sad.

    "I was told that Invensys is conducting an 'internal investigation' to discover who is 'leaking information to the outside'. I assume this means YOU since the other analysts in the industry wouldn't have the balls to repeat it.

    "Good luck. Keep at it."

Robert M. Greenfield [rgreenfield@acromag.com] wrote about my discussion on eBooks :
    "What do you think is the likelihood of engineers adopting digital trade magazines any time soon?

    "The trade magazine publishers are deeply suffering as a result of severe cutbacks in advertising pages and rising printing and mailing costs. I've noticed that some formerly free magazines are now charging nominal fees ($15/yr). Others are testing digital magazines.

    "If magazines like InTech, Control Engineering, Control, Control Solutions, and IAN get any skinnier, they won't even be worth reading. And I don't see advertisers tolerating another price hike. Of course, a little trimming of the herd might make the survivors a lot healthier.

    "But, I still see the day coming very soon, when engineers will face a choice of free digital magazines or paying for printed copies. Which do you think they'll choose?"

John Petzen [John.Petzen@Harrisgroup.com] wrote:
    "You seem to have all the bases covered on weblogs and discussions devoted to various industry players who are in trouble in some fashion. I find it interesting that you don't have an Emerson weblog. Is there a reason for their omission? Surely the DeltaV control platform has created at least a ripple on the radar screen."
Pinto response: Yes, others too have requested weblogs on ABB, Emerson, Schneider and others. I'll get to these soon.

If any of you would like to get started with some weblog comments on these companies, or on other topics, please email: jim@jimpinto.com

Meantime, the traffic on Honeywell, Siemens and Invensys weblogs is flowing hot and heavy. Please note, I am moderator and reserve editorial rights - I do not include obviously wrong comments.

Click Get connected and stay upto date with the latest weblogs

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