Enterra Insights

A Thought Probe Series on Tomorrow's Population, Big Data, and Personalized Predictive Analytics: Part 2, Moving Forward

In Part 1 of this series, I discussed recommendations about how urban areas can begin efforts to make their cities smarter and more efficient. In this post, I discuss why moving forward is more controversial than one might think and how some of the concerns can be addressed. Greg Lindsay asks, "Who will own the brains of smart cities--citizens or corporations?" ["The Battle for Control of Smart Cities," Fast Company, 16 December 2012] My first reaction is, "Does it matter?" Lindsay believes it does. He writes:

"At stake is an impending massive trove of data, not to mention issues of privacy, services, and inclusion. The battle may be fought in the streets between bands of Jane Jacobs-inspired hacktivists pushing for self-serve governance and a latter-day Robert Moses carving out monopolies for IBM or Cisco instead of the Triborough Bridge Authority. Without a delicate balance between the scale of big companies and the DIY spirit of 'gov 2.0' champions, the urban poor could be the biggest losers. Achieving that balance falls to smarter cities' mayors, who must keep the tech heavyweights in check and 'frame an agenda of openness, transparency and inclusiveness.'"

Those are not just his conclusions, but conclusions of a Rockefeller Foundation-sponsored study entitled "The Future of Cities, Information, and Inclusion" that was published by the Institute for the Future. Lindsay reports that authors of the study conclude, "Without this catalyst for cooperation, we may repeat the devastating urban conflicts of the 20th century that pitted central planners like Robert Moses against community activists like Jane Jacobs." Lindsay continues:

"Befitting the Foundation's focus on the world's poorest and what it calls 'smart globalization,' the report's emphasis is on smartening up cities in the developing world--cities that lack both data about their swelling populations and the tools needed to make sense of it. The roster of expert contributors comprises a who's who of ubiquitous computing and gov 2.0 types, including MIT Senseable City Lab director Carlo Ratti, Everyware author Adam Greenfield, the Santa Fe Institute’s Nathan Eagle, Intel Labs Director Genevieve Bell, Microsoft Research’s Jonathan Donner, and San Francisco CIO Chris Vein. Together, they highlight five 'technologies that matter' for cities in 2020: mobile broadband; smart personal devices, whether they're dirt-cheap phones or tablets; government-sponsored cloud computing (modeled on the U.K.'s national 'G-cloud' initiative); open-source public databases to promote grassroots innovation, and 'public interfaces.' Instead of Internet cafés, imagine an outdoor LED screen and hacked Kinect box allowing literally anyone to access the Net using only gestures."

I admit the list of participants is impressive and their concerns certainly deserve consideration. The fact of the matter is, however, that not all data that could benefit smart cities is publicly owned or available. The World Economic Forum has declared data to be a new asset class, like gold or oil, and organizations that own that data are counting on benefiting from it. Does that somehow make them evil or uncompassionate? Of course not. The current global economic morass also demonstrates that reliance on public programs can result in national debts that inevitably hurt the poor more than the rich. The only way to move forward is to embrace public/private partnerships that benefit both sectors.

In first segment of this series, I noted that even when governments are offered programs created by civic-minded activists that have an obvious benefit for their citizens, politicians have often been hesitant to implement them. It's hard to imagine that something as important as smart city initiatives should be placed solely in the hands of government or ceded to unstructured populist movements. Both structure and broad-based support are required. Everyone seems to agree that the sine qua non for good smart city initiatives is the availability of data (BIG data). But you can't raise the subject of big data without also raising privacy concerns. Anthony Townsend, director of technology development at IFTF and the report's lead author, told Lindsay, that "those tensions come up in every discussion, whether it's privacy versus the public good, collecting data versus parsing it, and guaranteeing access to all citizens versus carving out virtual gated communities and corporate enclaves." Townsend pointed out how the same data could be used to promote good initiatives or could be used to obstruct initiatives. "There are ways," he told Lindsay, "all of these can play out as either dystopia or utopia."

Lindsay states that the report "is the highest-profile critique to date of the bright green rhetoric from companies like IBM, Siemens or Cisco, which have seized the chance to pad their top lines with government sales while corporate IT customers stockpile mountains of cash." Lindsay obviously has strong feelings on this subject. He could have written something like this: "The report is critique of smart city initiatives from companies, like IBM, Siemens, or Cisco, that see an opportunity to grow their businesses while helping cities become more efficient and effective." But that sentence wouldn't have raised your hackles nor have presented large corporations in a negative light -- an impression that Lindsay obviously wants to impart. Lindsay continues with a discussion of arguments presented in the report:

"Global technology companies are offering 'smart city in a box' solutions. Governments are responding to their pitch: a smarter, cleaner, safer city. But there is no guarantee that technology solutions developed in one city can be transplanted elsewhere. As firms compete to corner the government market, cities will benefit from innovation. But if one company comes out on top, cities could see infrastructure end up in the control of a monopoly whose interests are not aligned with the city or its residents."

Those concerns are certainly valid, but they are also addressable. They certainly shouldn't be used as arguments to prevent smart city initiatives from moving forward. Lindsay admits that cities need global technology companies to help them achieve more efficient operations; but, he writes: "Government officials just need to avoid being sold a bill of goods." Of course, they should. Townsend, too, admits that grassroots efforts aren't "scalable or sustainable yet, and that's what these corporate campaigns bring to the table." Smart city initiatives need to get all stakeholders involved.

Usman Haque, founder of Pachube.com, agrees that we need to move forward with smart cities initiatives but he believes that the current offerings of global technology companies haven't gone far enough. "For almost a decade, corporate giants like IBM and Cisco have been banging the smart city drum and," he writes, "frankly, the beat is getting a little boring. We've long been promised great things: more energy efficient power grids, an end to traffic jams and even rubbish bins that let you know when they're full." ["Surely there's a smarter approach to smart cities?" Wired, 17 April 2012] He continues:

"The truth is, all of these 'smart city" initiatives actually only reflect the most basic functionalities of the Internet of Things (IoT). The true potential for smart cities is so much greater, so much more interesting, and so much more important."

I couldn't agree more. With the world becoming more urbanized every day, pursuing smart city initiatives is important. Haque agrees with Lindsay that it also represents big bucks, which is why "every major IT company is looking for its slice of the smart city pie." He lists a few of those corporate initiatives, like IBM's Smarter Planet and Cisco's Smart+Connected Communities. He writes, "Despite the subtle differences in these approaches, in both IBM and Cisco's eyes, smart cities predict the convergence of smart information and communication technologies to improve the efficiency and effectiveness of urban systems and services." Haque doesn't quibble about the goals of smart city initiatives, but, like Lindsay, he rejects one-size-fit-all approaches. He believes such initiatives approach "the evolution of smart cities from fundamentally the wrong direction. "Their strategies focus on the city as a single entity, rather than the people -- citizens -- that bring it to life."

I agree with Haque that cities are too complex to be seen as a homogeneous entity. An approach to smart city planning that uses something like Enterra Solutions' Sense, Think/Learn, Act™ technology and advanced analytics could differentiate the needs of individual neighborhoods. Haque states, "Any adequate model for the smart city must focus on the smartness of its citizens and encourage the processes that make cities important: those that sustain very different -- sometimes conflicting -- activities." The very complexity of cities requires that technology be used, but used more effectively. Haque continues:

"Cities are, by definition, engines of diversity so focusing solely on streamlining utilities, transport, construction and unseen government processes can be massively counter-productive, in much the same way that the 1960s idealistic fondness for social-housing tower block economic efficiency was found, ultimately, to be socially and culturally unsustainable. We, citizens, create and recreate our cities with every step we take, every conversation we have, every nod to a neighbour, every space we inhabit, every structure we erect, every transaction we make. A smart city should help us increase these serendipitous connections. It should actively and consciously enable us to contribute to data-making (rather than being mere consumers of it), and encourage us to make far better use of data that's already around us."

That is very well argued. In first segment of this series, I referred to Dr. Boyd Cohen's Smart City Wheel. At the hub of the wheel, you find smart people, smart government, smart economy, smart environment, smart mobility, and smart living. I believe that Cohen's Wheel, and its associated indicators, take into account the concerns and recommendations expressed by Lindsay and Haque. Haque believes it all starts with (and will move forward because of) smart people. He writes:

"The 'smartness' of smart cities will not be driven by orders coming from the unseen central government computers of science fiction, dictating the population's actions from afar. Rather, smart cities will be smart because their citizens have found new ways to craft, interlink and make sense of their own data. Smart cities cannot be defined by one application, or central organising body, that sets pre-programmed limits. They will be defined by individual citizens, who are anxious to collaborate with each other -- to create devices and applications that solve specific local problems. Smart cities will be places that foster creativity, where citizens are generators of ideas, services and solutions, rather than subservient and passive recipients of them."

Haque says that we should abandon the dream of ubiquitous sensors and extraordinary networks because for most of the world such initiatives will be unaffordable for a long, long time. "Even if [cities] could find funding for the sensor hardware and installation costs, the on-going maintenance would be enormous," he writes. "The sheer volume of accessible data being transmitted would force huge investment in data centres and other IT infrastructure." So what should we concentrate on? He says that companies like IBM and Cisco should concentrate on developing "a flexible system that can dynamically adjust to changes, one that responds to unpredictable phenomena in a way that is not planned, and that harnesses the creative capacity of inhabitants." Rather than a one-size-fits-all solution, "citizens should be able to adjust and rewire the smart city as needed to solve problems and overcome obstacles in their own lives."

Haque agrees that both "corporations and governments ... have a major role to play in the smart city." But his belief is that they should make "data openly available for coders to build upon." Frankly, that's not likely to happen for a lot of data. Proprietary data remains too valuable an asset. I do, however, agree with his suggestion that corporations and governments should "make it easy for citizens themselves to create and contribute their own data." Haque concludes:

"The entry of pervasive computing into the city cannot be seen as a 'one-stop-shop' that will solve all of our problems from pollution to traffic management. Despite the best intentions of Cisco and IBM, connecting systems and bridging data will not by itself solve tough issues. At best, such systems will likely just provide greater visibility of urban problems. However, empowering citizens to find and build their own solutions dynamically may yet allow the full potential of smart cities to be realised."

I agree with Haque that all stakeholders must be engaged and stay engaged. That means that they must see tangible benefits from the initiatives that are implemented; especially if we expect them to continue to create and contribute their own data.

A Thought Probe Series on Tomorrow's Population, Big Data, and Personalized Predictive Analytics: Part 1, Getting Started

On Friday, for the next several weeks, I'll be posting a series of articles examining how the world is becoming more urbanized and how governments, businesses, and citizens must adapt to ensure that urban growth is done intelligently. I'll discuss how big data can help influence city planning and operations as well as help manufacturers and retailers ensure that their products and services are available to urbanites. These topics are generally grouped together under the topic of smart cities.

In the post entitled Hurricane Sandy and the Resilience of Cities, I indicated that I had more to say about cities and how to make them more resilient. I believe that resilient cities are smart cities. Dr. Boyd Cohen, a climate strategist, believes "the smart-cities movement is being held back by a lack of clarity and consensus around what a smart city is and what the components of a smart city actually are." ["What Exactly Is A Smart City?, Fast Company, 21 September 2012] He continues:

"While some people continue to take a narrow view of smart cities by seeing them as places that make better use of information and communication technology (ICT), the cities I work with ... all view smart cities as a broad, integrated approach to improving the efficiency of city operations, the quality of life for its citizens, and growing the local economy."

Although I'm a technology guy, I agree with Cohen that a broad definition of what constitutes a smart city is better than a narrow one. To show how various city sectors come together to make a smart city, Cohen has developed what he calls the Smart City Wheel. At the hub of the wheel, you find smart people, smart government, smart economy, smart environment, smart mobility, and smart living.

Cohen admits that his "model has been inspired by the work of many others." The fact that many others are working to make cities smarter should be encouraging, especially in the light of the fact that urbanization is occurring at an historical rate. Cohen indicates that "there are over 100 indicators to help cities track their performance with specific actions developed for specific needs" behind the model. He says that efforts to create a smart city should begin with three steps. They are: 1) Create a vision with citizen engagement; 2) Develop baselines, sets targets, and choose indicators; and, 3) Go lean.

Rick Robinson, an Executive Architect at IBM specializing in emerging technologies and Smarter Cities and a self-labeled Urban Technologist, has his own ideas about to get a smart cities program started. ["How Smarter Cities Get Started," The Urban Technologist, 26 July 2012] He writes:

"Many of the environmental, social and economic forces behind the transition to Smarter Cities are common everywhere; however, the capabilities that enable cities to act in response to them are usually very specific to individual cities. They depend on factors such as geographic location, the structure and performance of the local economy, the character of local communities, and the approach of leaders and stakeholders across the city. The relationships between those stakeholders and communities are crucial. Cities may aspire to encourage economic growth amongst small, high-technology businesses; or to stimulate innovation in service delivery by social enterprises; or to switch to more sustainable patterns of travel and energy usage. To act successfully to achieve any of these aims, long and complex chains of connections between individuals need to work effectively, from city leaders, through their organisations, to community and business associations such as small business forums, neighbourhood communities, and faith groups, to individual companies, their employees and citizens across the city."

Robinson makes an important point about the uniqueness of each urban area's situation. The only way to discover that uniqueness, and the connections that are critical for improving society, is through analysis of big data. As Robinson notes in his article, a "complex web of city systems" must be woven into a cohesiveness system working together towards the same objectives. He doesn't claim to have all of the answers about how this can be done, but he writes that there are observable "patterns in the behaviour of the cities who have made the most progress." He states it all starts with a plan.

"Cities already have plans, of course. In fact, often they have lots of plans – for the economy, for housing, for public service transformation, for marketing and for many other aspects of urban systems. What is really required in a Smarter City context, though, is a single plan that captures the vision and means for transformation; and that is collectively defined and owned by stakeholders across the city; not by any single organisation acting alone. It needs to be consistent with existing plans within individual domains of the city; and in time needs to influence those plans to develop and change."

While working in the risk management area several years ago, we noticed that, because large organizations have departmental silos, each department usually maintains its own mitigation and recovery plan. Because those plans aren't coordinated, actions necessary to make one plan work (like shutting down a system) could negatively impact the mitigation plans of other departments. Only through effective coordination could the overall objective of protecting the organization be realized. The same thing holds true when developing a plan for a smart city; plans must be coordinated (if not integrated) so that various groups aren't working at cross purposes. Technology, like the Sense, Think/Learn, Act™ system being developed at Enterra Solutions, can be used to code natural language plans and then analyze them to discover conflicts, redundancies, non-obvious connections (inferences) and so forth. The same technology can be used to discover the unique qualities of neighborhoods and the important connections between stakeholders that are often not easy, or obvious, to understand. Robinson continues:

"A Smarter City plan needs to set out a vision that is clear and succinct, often expressed in a single sentence capturing the future that the city aspires to. That vision is usually supported by a handful of statements that summarise its impact on key aspects of the city – such as wealth creation, inclusivity and sustainability. Together these statements are something that everyone involved in the city can understand, agree to and promote. ... To make the vision deliverable, a set of quantified objectives against which progress can be measured are vital. In IBM as we work with cities to establish these measures, we're learning that social, financial, environmental, strategic and brand values are all important and related. They could include improvements in education attainment; creation of jobs; increase in the GDP contribution by small businesses in specific sectors; reduction in carbon impact in specific systems or across the city as a whole; improvements in measures of health and well-being; and may include some qualitative as well as quantifiable criteria. It is against such objectives that specific programmes and initiatives can be designed in order to make real progress towards the city’s vision.

In other words, Robinson agrees with Cohen that creating a vision is a critical first step towards a smarter city. Robinson believes that the vision is also critical for aligning stakeholder actions for achieving success. To ensure that stakeholders stay engaged and motivated, Robinson recommends "a mixture of long and short-term projects across city domains; and in particular that [the plan] includes some 'quick wins' – in attempting to work in new partnerships to achieve new objectives, nothing builds confidence and trust like early success." Like Cohen, Robinson believes that everyone must be engaged for a plan to succeed. He writes:

"Once stakeholders from a city ecosystem have come together to define a vision and a plan to achieve it, it's vital that they maintain a regular and empowered decision-making forum to drive progress. The delivery of a Smarter City plan relies on many separate investments and activities being undertaken by many independent individuals and organisations, justified on an ongoing basis against their various short-term financial obligations. Keeping such a complex programme on track to achieve cohesive city-level outcomes is an enormous challenge. Such forums are often chaired by the city's local authority; and they often involve representatives from local universities who act as trusted advisors on topics such as urban systems, sustainability and technology. They can include representatives from local employers, faith and community groups, institutions such as sports and retail centres, and trusted partners in domains such as technology, transport, city planning, architecture and energy. The broader the forum, the more completely the city is represented; but these are 'coalitions of the willing', and each city begins with its own unique mix. In fact, a formative event or workshop that brings such city stakeholders together for the first time, is often the catalyst for the development of a Smarter City plan in the first place."

Like many projects, initial excitement for smart city initiatives can be high and then taper off over time. Keeping people engaged is absolutely essential. That won't happen if the smart cities movement is viewed as a passing trend. Ben Rooney writes, "In the pantheon of Next Big Thing trends, the concept of 'smart cities' is one of the trendiest." ["'Smart City' Planning Needs the Right Balance," Wall Street Journal, 27 September 2012] Rooney's fear is that smart cities initiatives will be driven by well-meaning, but clueless, governments and that "there is a fear that such top-down programs may threaten the very vitality that attracts people to cities in the first place." Done correctly, smart cities should increase the vitality of cities not diminish it. That's why Cohen and Robinson are so insistent that all stakeholders need to be engaged.

Rooney agrees that smart cities initiatives are generally based on data analysis. He claims, however, that doing so is nothing new. He explains:

"One of the first uses of data to drive civic policy was more than 150 years ago when during the 1854 London cholera outbreak surgeon John Snow plotted cases on a map. He traced the outbreak to a water pump in Broad—now Broadwick—Street. When the pump handle was taken off, the number of cases immediately began to decline."

Imagine that kind of analysis being applied to urban challenges based on enormous amounts of data and using today's massive computer power. Health and safety are very important areas where connectivity and analysis can play a vital role. This value was recently demonstrated during the investigation that followed the terrorist bombings in Boston. Video and photographic evidence were critical in catching the perpetrators. Enterra Solutions has helped install a system at the Port of Philadelphia that has been recognized for helping make the port more secure. Holt Logistics' Chief of Security, Kurt Ferry, praises the system as "an example of a successful collaboration between private and public sector organizations using grant funds to enhance regional maritime security." ["Security Grants Help Improve Domain Awareness: A Success Story," The Beacon, Winter 2011] According to Rooney, cities of the future (like one being built in Portugal) will be even more connected. He writes:

"PlanIT is a €10 billion, four-year project to build a new smart city in Portugal to house some 225,000 people. With sensors built into every building it presents itself as an urban utopia where smart buildings can sense our presence and anticipate our needs. But behind this drive for efficiency is a fear that optimizing for data will drive out the inefficiencies that imbue cities with their humanity; cinematic history is littered with cautionary urban dystopias, from Fritz Lang's 'Metropolis' to the Wachowski brothers' 'The Matrix.' As Ben Hammersley, the U.K. prime minister's ambassador to Tech City, told the audience at the recent WSJ Tech Cafe event, optimizing is a dangerous thing unless you are quite clear on what exactly you are optimizing."

You recall that one of Cohen's first steps was to "go lean." Rooney is warning that you can go too lean. I agree. Hammersley an adviser to the Danish city of Aarhus, gave the Tech Cafe audience a specific example of what he was talking about. He told him:

"'Most smart-city initiatives are about optimizing the route for commuters getting to the office,' he told the audience. 'But Aarhus, which has the highest number of pavement cafés in the country—it is essentially one huge café—doesn't want to optimize that. The lesson is be careful what you measure because you may end up optimizing on the wrong thing.'"

That's where big data analysis and relationship discovery technology can play a major role in helping cities become the best they can be. Rooney labels the use of big data as "a bottom-up" approach to smart city planning. He writes:

"A very different kind of smart-city initiative has had success in cities as diverse culturally and geographically as San Francisco and Singapore, and is coming to Europe. Called Urban Prototyping, the movement approaches cities from a bottom-up—not top-down—viewpoint. Peter Hirshberg, who lives in San Francisco, is the man behind the drive, which aims to bring together programmers, planners, activists, and even artists to use data and technology to solve problems in cities. 'There needed to be a dialog between people doing interesting things and the folks running the city,' he said. 'San Francisco is awash with data, but it turned out that inside the bus system the guys use Walkie Talkies and clipboards to track busses that break down.' Over one weekend in July 2011 ... developers built an iPad app to solve this problem. 'Everyone wants the busses to run properly. This was a case of citizens getting together and solving a problem.' He cites dozens of other examples. 'We had a festival called "The Summer of Smart". The head of public works for San Francisco came along with a proposal. "Where I see public art I don’t see graffiti," he told us. "Where I see graffiti, I don’t see public art."' The result was a project called Art Here that brings together the two."

Although it sounds great, Rooney admits that even the best-intentioned efforts need champions who can make things happen. He reports that nine months after the bus app had been developed for the city, it still hadn't been implemented. That kind of underwhelming response can trigger both anger and ambivalence. As Rooney put it, "City Hall has proved to be the movement’s biggest challenge." He concludes, "If this movement is to make a real impact on the lives of city dwellers it will take more than some well-intentioned hackers and a lot of pizza."

I'm speculating that is why one of the main sectors on Cohen's Smart Cities Wheel is Smart People. Based on advertisements run during the last political season, it's clear that we could use a lot more smart people in government. Robinson agrees that "it’s impossible to understate the importance of individual people in making cities Smarter. The functioning of a city is the combined effect of the behaviour of all of the people within it; and Smarter City systems will not change anything unless they engage with and meet the needs of those individuals." Fortunately, I'm an optimist. I believe that technology can be used to create a better future and smarter cities.

Water, Water, Every Where -- What Can We do About It? -- Part 3

In the final segment of this three-part series, I want to discuss some of the technological breakthroughs that could help mitigate the predicted water crisis as well as some of strategies that have been recommended for dealing with the crisis. Before doing that, however, I thought a brief review of the problem would be in order. For Water Day 2013, the celebrated actor Matt Damon narrated a clever video on the subject. It takes less than three minutes to watch.

In Part 2 of a series of posts entitled "Let's Talk Water," I discussed a number of ideas that were being worked on including: obtaining drinking water from humidity in the air; managing drinking water systems by computer; finding and fixing leaks in existing water systems; cleaning sewage water with diamonds; more cost-effective ways of disposing of hazardous waste water; a bicycle-powered water pump; a low-cost safe water tester; and a student-designed Solarball that can be used to obtain safe drinking water. In Part 3 of that series, I discussed advances in desalination techniques. Desalination is particularly important because most of the world's water is found in its oceans and a growing proportion of the world's population lives along the coast.

"It's been centuries since Coleridge's Ancient Mariner lamented the undrinkable salty seas around him," writes Alex Planes. "Today, it's easier -- but not necessarily easy -- to get fresh water from the vast water reserves of the world's oceans. Over 15,000 desalinization plants now operate throughout the world, but they produce less than 1% of the water the world consumes every day. Population growth and water scarcity often go hand in hand, so anything that could enhance the usefulness of desalinization efforts would be well-received everywhere." ["This Tiny Innovation Is a Giant Leap Forward for Water Services," The Motley Fool, 25 March 2013] The tiny device referred to in Plane's headlines is a Lockheed Martin filter that "makes use of graphene, an atom-thin sheet of pure carbon that's arranged in a hexagonal pattern." The product is called Perforene. Planes continues:

"It's 1,000 times stronger than steel but 100 times as permeable as competing membranes. However, that strength comes on a single-atom sheet, which is still going to be delicate when applied to industrial uses. Lockheed claims to be a year or two away from prototype testing, and by the time Perforene is ready for action there may be 107 million cubic meters of desalinization capacity already at work around the world. That's a doubling of capacity from 2008, and an estimated $64 billion will be spent on this capacity growth. If Perforene can provide the same functionality at a fraction of the energy cost, it's quite feasible to expect the next decade of desalinization build-out to be far more intense. If Perforene proves effective, it might lead to the development of smaller, more distributed desalinization machinery for the developing world."

Professor Nidal Hilal, the director of the Centre for Water Advanced Technologies and Environmental Research (CWATER) at Swansea University, states, "Basically we are taking too much water from water resources, and tapping into the sea is the only option available to address such water shortages. Desalination of sea water increasingly proves to be the most practical – and in many cases the only – solution for many countries across the globe." ["Nano-water technology could be key to relieving water shortages, claims Swansea University expert," WalesOnline, 4 April 2013] Making sea water potable would go a long way towards mitigating potential coastal water shortages. Planes goes on to note that more effective filtration is not just important for desalination. Better filtration systems could also make wastewater treatment more effective and less costly.

Access to clean water, as mentioned in the first segment of this series and in the video above, is important if populations are going to remain healthy. To underscore this point, The Wall Street Journal awarded its top prize in the 2010 Asian Innovation Awards to "an inexpensive water purifier aimed at households that may not have electricity." ["Tata Water Purifier Wins the Top Prize for Novel Product," by Andrew Lavellee and Emily Veach, 25 October 2010] Another device designed for households without access to power is being developed in Morocco. "In the Sahara, nomads are among those suffering most from limited access to water, particularly during the hotter periods when rising salt levels in water drawn from wells make it undrinkable." ["Desert nomads marvel at water purifying device," MySinchew.com, 8 April 2013] The device, called the "waterpod," is being developed by "Alain Thibault, an ex-sailor who had to confront the issue of fresh water shortages at sea." The article continues:

"The device, which resembles a large letter box, currently costs around 500 euros ($650). But the inventors have already given courses at a college in Tiznit, on Morocco's Atlantic coast, to teach students how to produce them more cheaply. ' The waterpod is made of wood, cork, stainless steel and glass,' said Thierry Mauboussin, who is helping to promote the water project in Morocco. ... The waterpod ... can produce six litres of pure water daily from 12 litres of brackish water, according to its creators. They give it an estimated lifespan of 20 to 40 years, with just a daily clean needed to keep it in good condition."

If you want big breakthroughs in water usage, you have to look to the agricultural sector. Globally, 70 percent of all water consumption is involved with agriculture. The next largest sector is industry (20%). Domestic consumption accounts for only 10% of the total. One suggestion that has been made is to raise more food in so-called "vertical farms." A vertical farm is one contained in a highrise building. There are technological challenges associated with urban farms, but one of the up-sides of such farms is that they can use water much more efficiently and effectively than traditional farms. In fact, much of the required water can be treated wastewater that is often dumped into rivers or directly into the ocean. That creates a real win-win situation. Like it or not, some form of recycling must be adopted if the water shortage crisis is to be mitigated. The following video provides a good overview of the vertical farming concept. You can also learn more on the website The Vertical Farm.

Even if vertical farms do flourish, traditional farms, gardens, and ranches won't disappear. In fact, in developing parts of the world, traditional methods are likely to be used for foreseeable future. Fostering better water usage in these traditional settings is an area where research is continuing and some progress is being made. Techniques like "subsurface drip irrigation systems minimize the amount of water lost due to evaporation and runoff. ... Rainfall harvesting, efficient irrigation water transport, and use of reclaimed water can also lead to more efficient agricultural water use." ["4 Agricultural Practices and Technologies to Reduce Water Impacts," Water Implications of Biofuels Production in the United States, Water Science and Technology Board, 2008]

A number of strategies have been recommended for dealing with the coming water shortage. Some of those strategies were discussed by a panel of experts assembled by Bloomberg Businessweek Chairman Norman Pearlstine. ["How the Experts Would Fix the Water Supply," Bloomberg Businessweek, 21 March 2013] The experts included: Ahmet Bozer, President, Coca-Cola International (KO); Jae So, Manager, World Bank Water and Sanitation Program; Carlos Riva, CEO, Poseidon Water; Thomas Powers, Commissioner of Water Management, Chicago; and Jeff Sterba, President and CEO, American Water (AWK).

Jeff Sterba believes that the most important strategy to pursue is "increasing efficiency of [water] use." Carlos Riva believes that more has to be done in the area of desalination. Ahmet Bozer discussed one the technologies mentioned above -- harvesting rainwater. "India is a perfect example," he stated. "When you have the monsoon season, so much water comes and gets wasted. So how do we fulfill our commitment of returning the amount of water we use back to nature? A rainwater harvesting system. Now these systems don’t cost too much. And we’ve actually placed somewhere around 500 of them. And that water is stewarded back underground, and you’re replenishing the sources. So maybe there are emerging-market solutions that can also be applied to developing markets." Too many people still think in terms of large water distribution systems. I suspect that the developing world will leapfrog large grid systems (like it did when it leapfrogged landline telephone grids and adopted mobile phone systems) and rely on local water solutions. Such solutions will be cheaper to build, use, and maintain.

That doesn't mean, however, that large water systems will disappear. Thomas Powers talked about the leakage problem associated with aging water systems. The United Nations estimates that between 66-132 billion gallons of drinking water leaks from the supply systems in many mega cities each year. Powers reported that Chicago is replacing old pipes. "With our new program, over the next decade, we're going to replace nearly 1,000 miles of water main. And just in doing that," he state, "we conservatively estimate that we’ll be able to provide enough water for an additional 400,000 residents."

Jae So believes that putting more data in the hands of consumers could make a big difference. "We've been talking about how we're going to manage the supply and the service of water," she stated. "But there's a huge amount that we can do in managing customer demand. Just having information, like how much water you use, can be a big signal. Customers will actually look at that. And then there are information campaigns teaching people the value of water." Riva agrees that people need to start appreciating (and paying for) the value of water. "If you really want to have efficient use," he stated, "you need to align the pricing to the value of the usage." Sterba also agreed. "By and large, in the U.S. people don’t pay for water," he stated. "They pay for a delivery of it and cleaning of it, but the molecule is generally provided at no cost. Because the federal government isn’t going to be giving money out as it used to and states are in financial hardship, the communities are going to have to find other ways to raise capital. So I think prices will continue to move up."

The rising cost of water is likely to cause enormous angst around the world; but, "the obvious solution, at least to economists, is: if water has become a scarce good then it needs an appropriate price to properly allocate it." ["Can the World Afford Cheap Water?" by David Biello, Scientific American, 29 March 2013] Obviously, it will be the implementation of a combination of all these strategies that eventually helps mitigate the water crisis. Peoples' lives are going to change as a result. Some of the changes will be for the better and others will likely be unwelcomed. In the end, however, people understand that without water there is no life.

Water, Water, Every Where -- What Can We do About It? -- Part 1

In the Part Two of Samuel Taylor Coleridge's "The Rime of the Ancient Mariner," the bard discusses the distress of mariners floating upon a windless ocean under a withering sun and running out of supplies (including water). One of the most famous stanzas from that poem is:

Water, water, every where,
And all the boards did shrink;
Water, water, every where,
Nor any drop to drink.

More than one analyst has used that poetic imagery to portray the plight of the world's population in the years ahead. We sit on planet covered by water and yet the predictions about the availability of useful water are dire. Water is one of the rare topics that touches almost every category covered by this blog: globalization, innovation, supply chain, risk management, resilience, manufacturing, big data, smart cities, food and drink, and so forth.

In this first segment of this series, I'll discuss the general future of water and how it is likely to affect the world in general. In the second segment, I'll discuss how water (or lack of it) can affect supply chains. In the final segment, I'll discuss some of the innovations that are being made to mitigate the dire predictions of water shortages.

First, and foremost, the world needs potable water. "If water has the capacity to enhance life," writes The Economist, "its absence has the capacity to make it miserable." ["Enough is not enough," 20 May 2010] The article goes on to note that the sanitary habits of many developing nations add to current problems by polluting potentially drinkable water. As a result, disease increases, mortality decreases, and development is stifled. The article explains:

"Clean water is crucial for children with diarrhoea; they need rehydration and electrolytes to survive. Even then, they may still be at risk of malnutrition if they continue to suffer from diarrhoea, which will prevent them from absorbing their food properly. This usually has long-term consequences. Malnutrition in the womb and during the first two years of life is now seen as causing irreversible changes that lead to lifelong poor health. Poor health, bad in itself, translates into poor economic output. ... The problem is not strictly a matter of water scarcity. Indeed, expanding the availability of water may actually increase disease, since it may lead to stagnant pools in which mosquitoes breed, and then spread malaria or dengue fever; or perhaps excess water will run through human or toxic waste and thus contaminate the ground or a nearby stream. So hygiene and protected storage are essential. Yet there is a shortage of safe water for drinking and sanitation in many places, not least in the cities to which so many people are now flocking."

Water is so crucial to life and good health that the article notes, "One of the development goals set by the United Nations at the millennium was to halve the proportion of people without basic sanitation and a decent source of fresh water by 2015." That goal is unlikely to be met. "Progress is slow," the article states, "especially for sanitation, and particularly in Africa, and increasingly policymakers are finding that heavily subsidised projects are failing." Water is still predicted to be a scarce commodity and thus a valuable commodity. In fact, it is predicted to become so valuable that Bloomberg BusinessWeek asks, "Is water the new oil?" ["How the Experts Would Fix the Water Supply," 21 March 2013] The BusinessWeek article continues:

"Population growth and agricultural demand, combined with aging infrastructure and waste, have produced water scarcity in many countries. Prices are rising, and the lack of a dependable water supply is a massive health and economic issue."

Climate change has always played a role in the water picture. If you have too much water, you get flooding. If you have too little water, you get drought. Both situations can wipe out crops and create a cascading effect felt around the globe. Alan Berjga notes, "When rain doesn’t fall in Iowa, it's not just Des Moines that starts fretting. Food buyers from Addis Ababa to Beijing all are touched by the fate of the corn crop in the U.S., the world's breadbasket in an era when crop shortages mean riots." ["Drought Stalks the Global Food Supply," Bloomberg BusinessWeek, 5 July 2012] Berjga added:

"In 2010 a drought that withered Russia's wheat crop sent consumer prices in North Africa and the Middle East skyward, contributing to unrest that fed the Arab Spring. More than 60 food riots occurred worldwide between 2007 and 2009, when rapidly rising commodity prices wreaked havoc on family budgets, especially in poorer countries, where 70 percent of a household's income may go to food. An extended U.S. drought would have a 'tremendous' impact on world food prices, as a higher cost for one dollar-denominated export crop cascaded into others, [Abdolreza Abbassian, a senior economist with the United Nations’ Food & Agriculture Organization in Rome,] says. 'The world looks to the U.S. as the safest source of supply,' he says. 'Everyone watches the U.S. because they can rely on it. Without it, the world would starve.'"

This is not the first time that I've addressed the subject of water. Back in 2007 I wrote post entitled The Coming Water Wars? In that post, I cited several experts who noted that climate change will bring more rain to some areas (maybe too much rain) and less rain to other others. It is the very unpredictability of these rainfall totals that create such concern. As I wrote back then, "The trick, as it has always been, is getting the right amount of water to the right place at the right time." One of the articles I cited in that blog post was written by Doug Struck. ["Warming Will Exacerbate Global Water Conflicts," Washington Post, 20 August 2007]. Struck reported that such attempts to redistribute water have not always been successful or welcomed. He wrote:

"Humans have long attempted to reconcile nature's inconstancies with giant plumbing: reservoirs and dams that hold back floodwaters for more gradual release; dikes and other barriers to protect developed areas; canals and pipelines to take water from wet areas to dry. But that kind of infrastructure is expensive, especially for Third World governments. Environmentalists decry the impact on wildlife. And building dams in earthquake zones tempts disaster."

In a more recent three-part series on water (Let's Talk Water, Part 1, Part 2, and Part 3), I discussed many of the issues raised above. In Part 1, I noted some of the reasons that experts are fairly confident in their predictions that there are going to be water shortages. First, they note that glacial ice, which many parts of the world depend on as a source of fresh water, is not being replenished. Second, an equally important source of fresh water, water found under the ground, is also being depleted faster than it can be replenished. Both of those sources of water take years, if not decades or centuries, to replenish. In other words, mitigating water shortages in areas dependent on glacial or underground sources of water won't be easy or quick.

All of this, I admit, sounds pretty gloomy. The picture won't look too much brighter in the next segment of this series which will discuss the impact of water shortages on the supply chain. Hopefully, however, the future will look a little brighter after you read the final segment that discusses some of the breakthroughs that are being made and strategies being discussed to address the water challenge. In my 2007 post, I concluded, "Like other global problems, dealing with water control, collection, and distribution is going to take global leadership, global vision, and global solutions." That certainly hasn't changed.

Supply Chain Resiliency: A Vague Concept?

"Supply-chain resiliency is something companies in the high-tech sector and other industries have been talking about for years," writes Jennifer Baljko. "Even with all the talk, it still remains a relatively vague concept mentioned in the same dreamy way people discuss supply-chain flexibility and agility." ["Rethinking Supply Chain Resiliency," EBN, 21 February 2013] For many companies, actual supply chain resiliency may remain elusive; but, I'm not so sure that the concept remains vague. The remainder of Baljko's article leads me to believe that she has a pretty good concept of what supply chain resiliency is as well. She even defines it:

"As elusive and ever-changing as resilience may be (mostly because changing world circumstances require companies to stay flexible in how they construct and reconstruct resilient supply-chain practices), it certainly remains top of mind for many executives globally, according to a recent report from the World Economic Forum. In the most basic sense of the word, according to dictionary definitions, resilience is the ability to spring back into shape; it's elasticity, and a capacity to recover quickly from difficulties. The aptitude and skill needed to rapidly bounce back is more frequently being tested as companies confront many more complex risks and supply-chain disruptions."

I do agree with her that defining a problem and solving it are two very different things. With all of the supply chain disruptions that have occurred over the past several years, supply chain risk management (SCRM) has certainly crept up the priority list for a lot of organizations. They recognize the problem, know they need to do something about it, but, either through ignorance or procrastination, haven't acted. When I talk about companies being ignorant, I don't mean that their leadership is stupid. I mean that they don't have enough information about their supply chains to make decisions intelligently. Last year Bill McBeath wrote, "Firms' knowledge of their suppliers and the environments they operate in is often limited and out-of-date, crippling their ability to successfully manage the dynamics of their supply base." ["Supplier Risk and Compliance Management in Practice: Part One," ChainLink Research, 1 May 2012] One of the reasons that companies don't know as much as they should about their supply chains and the risks they face is that there is so much to know. McBeath included the following graphic in his article to give readers and idea about how complex this subject can be.

McBeath argues that "managing supplier risk and compliance is very important, but unfortunately that importance is often under-recognized." He explained:

"When a marketing executive or engineer does a great job, everyone sees the increase in sales or a great new hit product launched with a big bang ... and with those successes, the bonuses and praise flow. When a supplier risk and compliance manager does a great job, then what happens is ... nothing goes wrong. Everything goes smoothly. And most of the time, nobody notices. Of course if they mess up, all hell breaks loose."

One of the reasons that "all hell breaks loose" when something does go wrong is that company valuations are dramatically affected following a disruptive event. McBeath indicated research conducted by his company "found that the stock price fell on average about 25% as the result of each single disruption" and that "the effect persisted and the stock price barely moved for a full year after the event." Baljko reports that more recent research indicates that stock price drops aren't quite that steep (currently about 7% on average), but that is still a big enough drop for stockholders to be upset (see my post entitled Risk Management Concerns Continue to Draw Attention). Of course, not just company valuation is affected. "The average cost [of a supply disruption] is £200,000 [approximately $300,000], according to a new study by Zurich Insurance which surveyed 500 businesses with annual revenues of between £5 million and £300 million across manufacturing, technology, food and beverage, sport leisure and entertainment and wholesale businesses." ["What is supply chain disruption costing your company?" by Malory Davies, Supply Chain Standard, 3 July 2012] That may sound like a relatively small number, but that is for all kinds of disruptions not just those associated with major natural disasters. That same report "found that nine out of ten organisations had experienced significant disruptions to their supply chains" and that "the top three common causes of disruption were product quality incidents (57 per cent), adverse weather (45 per cent) and unplanned outage of IT (39 per cent). The average length of disruption was five weeks." Baljko concludes, "Given these issues and the fact that supply-chain volatility isn't likely to lessen anytime soon, maybe it's time to rethink resiliency and put a more common framework around it."

She suggests that a good starting point for building a framework can be found in a report issued earlier this year by the World Economic Forum (WEF) entitled "Building Resilience in Supply Chains." She writes:

"Under its Supply Chain Risk Initiative, the WEF aims to bring together leading cross-industry experts 'to explore the most critical threats facing supply chain networks, and to apply new risk response tools that can promote efficient risk management, security and resiliency in the complex global trading environment.' Ultimately, it wants to do noble things like 'strengthen the framework for global risk assessment' and 'improve collaboration and transparency across supply chain actors.'"

Baljko hopes that the WEF initiative isn't all talk and no action. She believes it offers some "good starting points to get more companies involved in the conversation and [it] could provide a framework for companies trying to make clearer sense of all this." She continues:

"While the report outlines common challenges, it emphasizes three 'must-have' requirements to develop a resilience framework:

• The need for a common risk vocabulary;
• Improved data and information flow across supply-chain actors; and
• Building greater agility and flexibility into the supply chain.

"More specifically, the top five measures the WEF named as the roll-up-your-sleeves-and-dive-in focus areas for creating a more comprehensive resiliency blueprint are:

1. Improved information sharing between governments and businesses
2. Harmonized legislative and regulatory standards
3. Building a culture of risk management across suppliers
4. Common risk assessment frameworks
5. Improved alert/warning systems

"These topics ... are big issues, and it's about time that companies step out of their individual silos ... to address the broad impact resiliency, flexibility, and agility has on the entire industry. The supply chain is, in fact, only as strong as its weakest link, and while moving the global conversation from chatter to action may be a monumental task causing its own kind of disruption, it has to happen sooner or later."

Robert J. Bowman, managing editor of SupplyChainBrain, agrees that the sooner companies start addressing this challenge the better. He notes, "Economies might rise and fall, but there's never a slowdown of disasters that impact global business. All that matters in the end is a company's ability to respond quickly. As [Sheryl] Toby puts it: 'Those that move the fastest to gain visibility are going to win in the competition game.'" ["Are You Ready for the Next Supply-Chain Disaster?" 11 June 2012] Brian W. Hagen, managing director of the Decision Empowerment Institute, told the SupplyChainBrain staff that SCRM specialists still are receiving enough respect from the top echelons of corporate leadership. "Anyone who is a practitioner of risk management feels like they're a second-class function in a company," he says. He agrees with McBeath that one reason is that "risk management can't deliver measurable results, in terms of value versus investment." That's a challenge that SCRM professionals will always face.

Given all of the factors that can adversely affect a supply chain, it should come as no surprise that mastering supply chain risk management has proven elusive. Nevertheless, I'm satisfied that the concept of supply chain resiliency is pretty clear in most professionals' minds.

The Future of 3D Printing

In his most recent State of the Union address, President Barack Obama stated, "Last year, we created our first manufacturing innovation institute in Youngstown, Ohio. A once-shuttered warehouse is now a state-of-the art lab where new workers are mastering the 3D printing that has the potential to revolutionize the way we make almost everything. There’s no reason this can't happen in other towns. So tonight, I’m announcing the launch of three more of these manufacturing hubs, where businesses will partner with the Department of Defense and Energy to turn regions left behind by globalization into global centers of high-tech jobs. And I ask this Congress to help create a network of 15 of these hubs and guarantee that the next revolution in manufacturing is made right here in America." ["Remarks by the President in the State of the Union Address," White House, 12 February 2013]

Official White House Photo by Chuck Kennedy

Clearly, the President believes that 3D printing marks a new era in manufacturing that could change the entire business landscape. Kinaxis analyst Andrew Bell agrees that "change is inevitable." "The question that we need to answer," he writes, "is how will it change?" ["What Could 3D Printing Mean for the Supply Chain? The 21st Century Supply Chain, 9 January 2013] Bell offers a few thoughts on the subject; he writes:

"One thing is for sure, the supply chain isn't going away. As usual, it will likely just get more complicated. Here are some of the areas that I propose will influence the supply chain as 3D printing becomes more and more mainstream, and I’m sure there are many more.

• Local Manufacturing – More things will be made closer to their final destination. This will have definite impact on the logistics industry, and will change the way business try and schedule their operations.
• Customizability – It will be easier, faster, and more efficient for companies to provide made-to-order products to their end users.
• Distribution of raw materials – There will need to be a dramatic shift in the way raw materials are distributed since these printers will require raw materials in order to produce the final product.
• New replacement parts model – Business will be able to provide replacement parts as required instead of trying to predict the need and manufacture the stock well in advance (as they do today)
• Blurred boundaries within businesses – A closer integration of the various departments of an organization will be mandatory. A siloed manufacturing department will no longer allow for a competitive business.

"My predictions may be right, or they may be wrong, but one thing I think all will agree on is that 3D printing will make the supply chain more complex and more difficult to manage."

Jim Stockton notes that 3D printing (or additive manufacturing) has been around since the 1980s. It has only broken into the mainstream because of recent breakthroughs that now have everyone talking. ["Top Innovations in the World of 3D Printing," BestDesignTuts, 12 February 2013] He writes:

"Some products produced with this technology that might already be a part of your daily life include shoes, jewellery, clothing accessories, and educational products. The field of engineering is also benefitting from the development of 3D printing, in terms of boosting geographic information systems, aerospace engineering, engineering projects, and construction processes. Furthermore, humans are already benefitting in the field of healthcare with dental and medical instruments and products being formulated with 3D printing. The automotive industry is able to make more reliable products at a quicker speed, and the industrial design and architecture fields are able to develop new products that were inconceivable only a decade ago."

What is really exciting people, however, is not so much what is currently being manufactured but the potential of what could be manufactured using 3D printers. Stockton writes:

"Engineers and scientists around the world are looking forward to the near future, in which printers will be able to create equipment, tools and devices via open-source models. This kind of advancement will drastically change the ways in which research and practical medicine are performed. Chemists are even attempting to build chemical compounds using 3D printers, and scientists have already started to replicate fossils and other ancient materials to better understand their compositions and functions. Architects wonder if in the future, buildings themselves can be printed from the ground up. The future of 3D printing is very bright – both in small-scale products for individual users and for large-scale projects, such as printing meters of building materials in the course of an hour and making intricate parts of automobiles and planes."

Sculpteo, a French-based 3D printing service, created the following infographic that provides a lot of interesting information about additive manufacturing and where it is headed.

Vivek Srinivasan and Jarrod Bassan offer ten trends that will likely define the direction that will be taken by additive manufacturing in the years ahead. ["Manufacturing The Future: 10 Trends To Come In 3D Printing," Forbes, 7 December 2012] They are:

1. 3D printing becomes industrial strength. Once reserved for prototypes and toys, 3D printing will become industrial strength. You will take a flight on an airliner that includes 3D-printed components, making it lighter and more fuel efficient. In fact, there are aircrafts that already contain some 3D-printed components. The technology will also start to be adopted for the direct manufacture of specialist components in industries like defense and automotive. Overall, the number of 3D printed parts in planes, cars and even appliances will increase without you knowing.
2. 3D printing starts saving lives. 3D-printed medical implants will improve the quality of life of someone close to you. Because 3D printing allows products to be custom-matched to an exact body shape, it is being used today for making better titanium bone implants, prosthetic limbs and orthodontic devices. Experiments in printing soft tissue are underway, and may soon allow printed veins and arteries to be used in operations. Today’s research into medical applications of 3D printing covers nano-medicine, pharmaceuticals and even printing of organs. Taken to the extreme, 3D printing could one day enable custom medicines and reduce if not eliminate the organ donor shortage.
3. Customization becomes the norm. You will buy a product, customized to your exact specifications, which is 3D-printed and delivered to your doorstep. Innovative companies will use 3D printing technologies to give themselves a competitive advantage by offering customization at the same price as their competitor’s standard products. At first this may range from novelty items like custom smartphone cases or ergonomic improvements to standard tools, but it will rapidly expand to new markets. The leaders will adjust their sales, distribution and marketing channels to take advantage of their capability to provide customization direct to the customer. Customization will also play a big role in healthcare devices such as 3D-printed hearing aids and artificial limbs.
4. Product innovation is faster. Everything from new car models to better home appliances will be designed more rapidly, bringing innovation to you faster. Because rapid prototyping using 3D printers reduces the time to turn a concept into a production-ready design, it allows designers to focus on the function of products. Although the use of 3D printing for rapid prototyping is not new, the rapidly decreasing cost, improved design software and increasing range of printable materials means designers will have more access to printers, allowing them to innovate faster by 3D printing an object early in the design phase, modifying it, re-printing it, and so on. The result will be better products, designed faster.
5. New companies develop innovative business models built on 3D printing. You will invest in a 3D printing company’s IPO. Start-up companies will flourish as a generation of innovators, hackers and “makers” take advantage of the capabilities of 3D printing to create new products or deliver services to the burgeoning 3D printer market. Some enterprises will fail, and there may be a boom-bust cycle, but 3D printing will spawn new and creative business models.
6. 3D print shops open at the mall. 3D print shops will begin to appear, at first servicing local markets with high-quality 3D printing services. Initially designed to service rapid-prototyping and other niche capabilities, these shops will branch into the consumer marketplace. As retailers begin to “ship the design, not the product,” the local 3D print shop will one day be where you pick up your customized, locally manufactured products, just like you pick up your printed photos from the local Walmart today.
7. Heated debates on who owns the rights emerge. As manufacturers and designers start to grapple with the prospect of their copyrighted designs being replicated easily on 3D printers, there will be high-profile test cases over the intellectual property of physical object designs. Just like file-sharing sites shook the music industry because they made it easy to copy and share music, the ability to easily copy, share, modify and print 3D objects will ignite a new wave of intellectual property issues.
8. New products with magical properties will tantalize us. New products – that can only be created on 3D printers – will combine new materials, nano scale and printed electronics to exhibit features that seem magical compared to today’s manufactured products. These printed products will be desirable and have distinct competitive advantage. The secret sauce is that 3D printing can control material as it is printed, right down to the molecules and atoms. As today’s research is perfected into tomorrow’s commercially available printers, expect exciting and desirable new products with amazing capabilities. The question is: What are these products and who will be selling them?
9. New machines grace the factory floor. Expect to see 3D printing machines appearing in factories. Already some niche components are produced more economically on 3D printers, but this is only on a small scale. Many manufacturers will begin experimenting with 3D printing for applications outside of prototyping. As the capabilities of 3D printers develop and manufacturers gain experience in integrating them into production lines and supply chains, expect hybrid manufacturing processes that incorporate some 3D-printed components. This will be further fueled by consumers desiring products that require 3D printers for their manufacture.
10. “Look what I made!” Your children will bring home 3D printed projects from school. Digital literacy – including Web and app development, electronics, collaboration and 3D design – will be supported by 3D printers in schools. A number of middle schools and high schools already have 3D printers. As 3D printing costs continue to fall, more schools will sign on. Digital literacy will be about things as well as bits.

If, as President Obama believes, a manufacturing revolution, led by 3D printing, is coming, it behooves business leaders in every field to ask themselves how it could affect their business model and assumptions about the future.

Secure Information Sharing Has Never Been More Important

If you are concerned about cybersecurity, you probably read the New York Times' article about the Chinese military carrying out hacking operations. ["Chinese Army Unit Is Seen as Tied to Hacking Against U.S.," by David E. Sanger, David Barboza, and Nicole Perlroth, 19 February 2013]. Sanger, Barboza, and Perlroth report:

"Mandiant, an American computer security firm, [has tracked] for the first time individual members of the most sophisticated of the Chinese hacking groups — known to many of its victims in the United States as 'Comment Crew' or 'Shanghai Group' — to the doorstep of the military unit's headquarters. The firm was not able to place the hackers inside the 12-story building, but makes a case there is no other plausible explanation for why so many attacks come out of one comparatively small area. ' Either they are coming from inside Unit 61398,' said Kevin Mandia, the founder and chief executive of Mandiant, in an interview last week, 'or the people who run the most-controlled, most-monitored Internet networks in the world are clueless about thousands of people generating attacks from this one neighborhood.' Other security firms that have tracked 'Comment Crew' say they also believe the group is state-sponsored, and a recent classified National Intelligence Estimate issued as a consensus document for all 16 of the United States intelligence agencies, makes a strong case that many of these hacking groups are either run by army officers or are contractors working for commands like Unit 61398, according to officials with knowledge of its classified content."

If you assume that the Chinese military is only going after government and military secrets, you would be wrong. The writers report that the "Comment Crew has drained terabytes of data from companies like Coca-Cola." Of even greater concern is the fact that the Comment Crew and other such groups are increasingly focused "on companies involved in the critical infrastructure of the United States — its electrical power grid, gas lines and waterworks." They note that "one target was a company with remote access to more than 60 percent of oil and gas pipelines in North America." More on that story below.

Not surprisingly, Chinese government spokesmen deny that China is engaged in cyber espionage. The truth, of course, is that China and many other governments (including the U.S.) have active cybersecurity units. To make that point, Sanger, Barboza, and Perlroth report, "Working with Israel, the United States has used malicious software called Stuxnet to disrupt Iran’s uranium enrichment program. But government officials insist they operate under strict, if classified, rules that bar using offensive weapons for nonmilitary purposes or stealing corporate data." Plausible deniability has always been an important tool in any government's kit. The Mandiant report makes such deniability a lot harder for the Chinese government to sell. The article reads like a best-selling "whodunit" novel whose prime suspects are named UglyGorilla and DOTA. The tale takes readers down dark cyber alleyways that lead to the streets of Shanghai and the murky ties with Chinese military.

As noted above, however, military and state secrets are not the only targets of Chinese hackers. Coca-Cola databases were attacked as its "executives were negotiating what would have been the largest foreign purchase of a Chinese company." During that time, the "Comment Crew was busy rummaging through [the company's] computers in an apparent effort to learn more about Coca-Cola’s negotiation strategy." The tale continues:

"The attack on Coca-Cola began, like hundreds before it, with a seemingly innocuous e-mail to an executive that was, in fact, a spearphishing attack. When the executive clicked on a malicious link in the e-mail, it gave the attackers a foothold inside Coca-Cola’s network. From inside, they sent confidential company files through a maze of computers back to Shanghai, on a weekly basis, unnoticed."

As a result of all of this activity, "Obama administration officials say they are planning to tell China’s new leaders in coming weeks that the volume and sophistication of the attacks have become so intense that they threaten the fundamental relationship between Washington and Beijing." That's not a good thing. When the world's two largest trade elephants start charging one another, the earth is going to shake. As Sanger, Barboza, and Perlroth write, "Mr. Obama faces a vexing choice: In a sprawling, vital relationship with China, is it worth a major confrontation between the world's largest and second largest economy over computer hacking?" The answer is likely to be in the affirmative given that Comment Crew has attacked organizations holding vital information about critical infrastructure. Sanger, Barboza, and Perlroth explain:

"The most troubling attack to date, security experts say, was a successful invasion of the Canadian arm of Telvent. The company, now owned by Schneider Electric, designs software that gives oil and gas pipeline companies and power grid operators remote access to valves, switches and security systems. Telvent keeps detailed blueprints on more than half of all the oil and gas pipelines in North and South America, and has access to their systems. In September [2012], Telvent Canada told customers that attackers had broken into its systems and taken project files. That access was immediately cut, so that the intruders could not take command of the systems. ... Security researchers who studied the malware used in the attack ... confirmed that the perpetrators were the Comment Crew. 'This is terrifying because — forget about the country — if someone hired me and told me they wanted to have the offensive capability to take out as many critical systems as possible, I would be going after the vendors and do things like what happened to Telvent,' [Dale]. Peterson of Digital Bond said. 'It's the holy grail.'"

The New York Times is not the only media outlet that been writing about Chinese hackers. Bloomberg Business published an interesting video and article on the subject as well. That's really the point of this post: No organization is completely safe from serious hacking efforts. "In an ever-increasingly digital world," writes John Casaretto, "many have become immune to the news of ongoing threats that persist on the internet, breaches, privacy, attacks happen every day and once in a while one of them is significant enough to hit the news." ["One World Labs Takes on Data Leaks in the Dark Web," SiliconANGLE, 18 February 2013] He continues:

"Sadly, even organizations fall under this false sense of security, feeling their risk and their security is solid, that all that is going on with their information is known and secured. The bare truth is that the breaches and data leaks we hear about form only the tip of the iceberg of what is really going on out there. The 'Dark Web' is probably the best way to describe this, the places where search engines do not go and things you can only find if you are looking for it; it includes botnets, anonymous networking, C&C networks - in places all over the world, including the U.S."

Casaretto warns that "once your data is out there, you are at risk." He explains:

"For anyone that thinks that their four-walls are secure, think again. No amount of egress security, DLP, predictive security models if you were even that far ahead of the pack can account for everything given so many variables for data leakage. Among the many vectors are smartphones, web browsing, social engineering, the risk of leaked information may even come from your own IT staff. As it turns out that time and time again, information is accidentally exposed even in the most innocent of circumstances."

Technology can help. Casaretto reports that "One World Labs (OWL) has developed a one-of-a-kind software engine that seeks, indexes and collects information on a platform called Open Source Intelligence Gathering (OSINT)." He continues:

"With 1% of the deep web accessible to the common person, it goes where no one else can, indexing deep into the nether reaches of the net. These are the kind of places where information is incoming, largely never even seen, much less shared by Google and typically unbeknownst to the company whose information has leaked. From countless forums, file-sharing sites, listservs, IRC channels, ftp servers and more there is a constant, nefarious publishing and sharing of information that could have your name on it. ... OSINT is a fascinating engine, comprised of analytics, semantics, and Big Data elements. The platform is built on a distributed clustered framework. As you can imagine, the index itself is distributed, encrypted and built with the utmost security layers throughout. Access to the system is tight. Network design comes into play as many, many sites are not appreciative of an index that could be scraping their information. The operation engages its tasks through a complicated and non-static web of anonymous networking and thousands of running proxy configurations designed to avoid detection and maintain access to sometimes super-secretive environments. If a company were to assign a human to engage in this type of discovery, they could quickly after some training, find and discover at a rate of about 1 page per minute. The OSINT engine scrapes 75 pages per second and is tuned to detect across the semantics of the most prevalent languages, complete with variations."

Another technology that can help involves Secure Information Sharing (SIS). Enterra’s Secure Information Sharing technology can be utilized to facilitate the sharing of information across partner communities. This framework is founded on an automated rules management process that monitors source policies and the environment where they are applied (i.e., situational awareness) and an Attribute Based Access Control (ABAC) model that coordinates information/data sharing across a federated group environment. The SIS framework applies policy-driven automated rules to ensure individuals are able to quickly and securely access their data resources to effectively perform their missions. It strengthens existing layered security solutions that are often not enough protection from cyber attacks, especially when orchestrated and/or aided by foreign governments like Russia and China.

What Follows Globalization, Part 2

In yesterday's post, I cited a number of pundits who worry that no clear model has emerged as the obvious candidate for what follows globalization. I noted that fifteen years ago Daniel Yergin predicted that "globality" would be the natural predecessor of globalization. He predicted that globalization would sweep away international barriers to trade and growth and "a new global reality" would emerge. As I noted yesterday, globality certainly doesn't seem to be the direction in which the world is heading; especially considering that regionalization is on the rise. "We talk of being a global community," writes Klaus Schwab, founder and executive chairman of the World Economic Forum, "but our institutions and behaviors tend to run counter to these currents." ["A 5-point plan for a new globalism," Fortune, 30 January 2013] He believes "Our new reality -- complex, interconnected, and faster than ever -- means that the need for global cooperation and global solutions has never been greater." He then asks, "So what criteria should underpin a global system for the 21st century?" First, and foremost, he believes, we need cooperation. He explains:

"Such a system must foster cooperation. We're all in this together. Governments, business, and civil society cannot do it on their own. Global issues are interrelated, and multi-stakeholder responses such as public-private partnerships bring innovative solutions to the table. They engage the passion, purpose, and networks of civil society with the resources and experience of business."

The concern of many analysts is that the world seems to becoming less cooperative and less connected instead of more cooperative and more connected (see my post entitled Globalization: Retreating or Transforming?). Joshua Cooper Ramo, vice chairman at Kissinger Associates, writes, "They forgot to tell us globalization has a reverse gear." ["Globalism goes backward," Fortune, 20 November 2012] Noting some of the trends discussed in yesterday's post as well as the fact that the Great Recession has turned many countries inward, he writes:

"Given that the idea of a more interconnected world has been at the heart of our assumptions about our future, such figures are, as [Pascal Lamy, head of the World Trade Organization] said, worrying. They echo in our politics as loudly as they do in our markets. People remember a world of protectionism, understand the consequences of no international cooperation, and nervously consider the icy historical proposition of 18th-century French economist Frédéric Bastiat: 'When goods don't cross borders, armies will.' Watching the country that in recent years has benefited most from an open world-trading order rebel against it is like hearing that people are looking for ways to opt out of gravity. But here it is: Two-thirds of Americans now believe more trade is bad for the country."

If that doesn't concern you, it should. Every credible analyst I know believes that global economic growth and prosperity depends on a rising middle class in emerging market countries. If America wants to glean a share of that growth and prosperity, it must embrace trade. Americans are too much in debt to continue to fuel a healthy and growing consumer economy on their own. We need to reach out to the millions of consumers being lifted out of poverty as a result of globalization. The second point of Schwab's path to globalism involves systemic action. He explains:

"A global system must also approach challenges in a systemic, integrated way. The issues on the global agenda are all interrelated, but our current system is too compartmentalized: the World Trade Organization for trade, the World Health Organization for health, and the International Monetary Fund for finance. We also have to establish the necessary interlinkages to create coherence. For example, how do we strike the optimal balance between the G-20 and the United Nations? How do we best engage nongovernmental actors? We need flexible networks -- more heterarchies, fewer hierarchies."

The business world is quickly learning that the future belongs to organizations that master horizontal processes and break down traditional corporate silos. Schwab insists that the same lesson needs to be learned on the global stage. Ramo undoubtedly agrees that global actions need to be coordinated and cross-functional cooperation fostered. He also believes that regionalization is more likely to see the kind of cooperation and coordination discussed by Schwab. Ramo writes:

"Networks are the essential metaphor of our age, what assembly lines were 150 years ago. And we've now moved from an era of extensive network development -- that 'Hi, nice to meet you' phase -- to something deeper, and often that means nearer and more local. This shift is being abetted by any number of practical factors: Prices of air and sea freight have inflated alongside fuel costs in recent years, for instance, putting a premium on closeness. ... But there's something else at work too: a sense that we may have gone too far, too fast, that we don't really understand the dynamics of the systems we've built. ... To be honest, we entered the first flush of globalization with the wrong tools. We didn't know how to manage interconnected bank risk, couldn't imagine the danger of asymmetrical threats like terrorism, and really believed that every time we tipped over a government in some other country, an American-style system would grow back in its place. ... The right answer is to pause, and to reengineer."

Schwab certainly agrees with Ramo that some re-engineering is required. His third point involves strategy-driven decision making. He writes:

"The system should be strategic, not crisis-driven. Most of our energy is currently absorbed by reactive rather than proactive measures. Managing crises instead of thinking about the future leads to defensive attitudes. We must adapt to a changing world, not defend outdated models."

Concerning this point, Ramo waggles an accusing finger at American nationalists. He can't understand why they have seemingly abandoned a national strategy that has helped maintain America's prominent role in world affairs. He writes:

"[The] logic of increasing returns tells us a lot about exactly what America needs to do next. Think of it this way: Every time you use a dollar bill, reach for a credit card, dial your cellphone, check your GPS -- nearly anytime you finger something with a network connection, what you are really doing is touching the outlines of a global system of interconnection that has been built with U.S. values. You're connecting to a system where we've been able to lock in the rest of the world. It's the reason that there is one Silicon Valley and one Wall Street -- and also why it is ridiculous that we are letting our dominance of those systems leach away not to external competition, but from the inside out. Whether it be ever more challenging visa regulations for engineers or ever greedier pollution of the use of finance, we're rotting away the basis of what has let us prosper. Maintaining a standard like the U.S. dollar as the global reserve currency is, in a world of locked-in systems, the greatest possible strategic advantage. Losing it would hurt our national security far more than almost any other international threat."

That doesn't mean that America has the right (or can) impose its will on the world. Ramo is arguing that smart Americans have been able to convince the world that the U.S. has a plan that is good for everyone. As the world has become more prone to crises, including within the U.S., the world isn't so sure that American leaders still have the vision or the will necessary to move the world forward in the right direction. Legitimacy is the fourth point discussed by Schwab. He writes:

"A global system must continually demonstrate legitimacy. Today, this goes beyond mandates based on democratic principles; it includes clear objectives and concrete results. We undoubtedly have a delivery problem. And since promised actions are not fulfilled, we also have a trust deficit with governments, international organizations, and business."

Conspiracy theorists always see something sinister in terms like "a global system." The fact of the matter, however, is that mail wouldn't move and planes wouldn't routinely and safely cross borders if there weren't international standards. In the virtual world, the World Wide Web wouldn't function if global standards weren't in place. Ensuring that organizations that set such standards have "legitimacy" is the best guarantee that countries, including the U.S., will have their voices heard and their interests considered when standards are adopted. The fact that so many people distrust (and at worst hate) politicians and government bureaucrats highlights the fact that organizational legitimacy is not going to be easy to achieve. Schwab's final point throws fuel on the fire of conspiracy. He writes:

"Our global governance system must embrace the notion of global citizenship. In an interconnected world, it is in the interest of nation-states to strive for solutions to truly global challenges, such as climate change. Today, we not only need a Charter of Human Rights, but must also expand this notion to include responsibilities."

The terms "global governance" and "global citizenship" are catalysts that heat up nationalistic fervor in many people. Nevertheless, people of every nationality do share the planet and actions on one side of the world can have consequences on the other side. There are numerous challenges that don't recognize borders and are blind to a person's ethnicity, culture, or religious beliefs. These challenges do require a coordinated effort to address. Schwab concludes, "Integrating these five criteria into our global system will be challenging, but if we don't, we will continue applying topical treatments to conditions that fundamentally require global cardiac care." The last thing we need is for the patient to die.

What Follows Globalization, Part 1

David M. Smick, editor of International Economy magazine, believes that the globalization model is crumbling and, with no apparent model to succeed it, he predicts that things are going to get very ugly. In fact, he predicts that things will get so bad over the coming four years that the Democratic Party could be out of power for a generation because President Obama was unlucky enough to get re-elected just as things are falling apart. ["What will replace the globalization model?" Washington Post, 16 October 2012] He writes:

"The risk stems from something more fundamental: The globalization model of the past 30 years is cracking up. And there appears to be no new model to replace it. Since April, an ugly economic world has turned uglier. The annual growth rate of total global exports has collapsed. Exports were a crucial engine in powering the U.S. economy out of the worst of the recession in the second half of 2009 and remain important for growth. Lately, even China and India, which were thought able to decouple from the weakness of the industrialized world, have fallen victim to the seizing up of global trade. The World Trade Organization is slashing its estimates for trade growth. The U.N. Conference on Trade and Development reports that economic growth is weakening worldwide."

The litany of evidence that Smick uses to make his case goes on to include failing trade negotiations, currency wars, rising nationalism, "and new software-based cost-cutting manufacturing technologies." He notes that the one remaining traditional flow of globalization that has been relatively untouched (i.e., the flow of capital) is "under worldwide assault." Smick feels compelled to conclude that the globalization model is all but dead. He continues:

"The U.S. economy can limp along under these conditions, but achieving the level of robust growth needed for full employment will be difficult. The rise of geopolitical tensions from globalization's collapse will increase U.S. investor nervousness, contributing to a debilitating risk-averse environment. It is difficult to underestimate the degree to which this flawed, sometimes frightening, good we call globalization has been the proverbial goose that laid the golden eggs. As a result, the public has unrealistic expectations about how much the economy can deliver in a post-globalization world."

I'm not quite as gloomy as Smick because, as I wrote in a previous post entitled Regionalization is on the Rise, regionalization is going to remain a prominent (if not increasing) feature of tomorrow's business landscape. This change will require businesses to adjust, but the adjustment shouldn't be too difficult. Regionalization makes more sense than globalization in many ways (e.g., ensuring production is closer to consumers and adapting products to fit regional tastes and lifestyles). Nevertheless, Smick concludes:

"Despite its flaws, globalization has been a wealth-creating machine. That is why the world's governments spent $15 trillion and central banks increased their balance sheets by $5 trillion in response to the financial crisis, essentially to try to save that machine. Yet the globalization model is cracking up anyway — and there's no replacement in sight."

The end of globalization portrayed by Smick is far different than the ending predicted by Daniel Yergin back in 1998. Fifteen years ago he popularized the term "globality" to describe "a hypothetical condition in which the process of globalization is complete or nearly so, barriers have fallen, and 'a new global reality' is emerging." Globality certainly doesn't seem to be the direction in which the world is heading; especially considering that regionalization is on the rise. Smick, however, doesn't offer any thoughts about what model he believes should succeed globalization if that model collapses completely. Eric Cazdyn and Imre Szeman agree that more thought needs to be given to this topic. In fact, they argue in their book entitled After Globalization that the "world is disabled by a fatal flaw: the inability to think 'an after' to globalization."

In many ways, Smick's observations mirror those of John Ralston Saul. Five years ago he was preaching that after three decades of globalization, the results are mixed. "These," he wrote, "include some remarkable successes, some disturbing failures and a collection of what might best be called running sores." ["After Globalization," The Tyee, 27 June 2005] He continued:

"That very clear idea of Globalization is now slipping away. Much of it is already gone. Parts of it will probably remain. The field is crowded with other competing ideas, ideologies and influences ranging from the positive to the catastrophic. In this atmosphere of confusion, we can't be sure what is coming next, although we could almost certainly influence the outcome."

Saul claims that the "Privatize, privatize, privatize" mantra that was continuously chanted by "Prophets of Globalization" was eventually replaced by calls for national rule of law. Like Smick, Cazdyn, and Szeman, Saul viewed the lack of a real understanding of what was going to follow globalization as troubling. He wrote:

"We are transiting one of those moments that separate more driven or coherent eras. It is like being in a vacuum, except that this is a chaotic vacuum, one filled with dense disorder and contradictory tendencies. Think of it as a storm between two weather fronts. Or think of those moments in fast-moving sports, like soccer or hockey, when a team loses its momentum and there is furious, disordered activity until one side finds the pattern and the energy to give it control. These moments tend to begin with denial on all sides. The confusion frightens those who thought they were setting the direction. And it disappoints those who criticized that direction. There is nothing decisive or noble about the situation. The options are not clear."

Saul, however, does not simply toss up his hands in the face of impending doom. He looks chaos in the eyes and sees opportunity. He explains:

"A period of uncertainty is also one of choice, and therefore of opportunity. We cannot know how long it will last. Probably not long. And those choices that set the future will come insidiously, in fits and starts. Some have already presented themselves and somehow been processed, without our fully registering that a determining step was taken. The shape of what comes next will therefore be decided - a conscious act - or it will be left to various interest groups to decide for us, or simply to fate and circumstance. It will probably emerge from a mix of all three. The soundness of the outcome will depend on the balance between these necessary mechanisms. The most dangerous disequilibrium will have favoured fate and circumstance over the other two. The most mediocre, interest groups. The soundest equilibrium would be led by conscious public decisions."

If Saul is correct, then the Great Recession hopefully snapped a few government and business leaders back to reality. As I noted above, regionalization (which is taking place within the larger framework of globalization) is likely to be one of the first follow-on models to globalization. It will not look anything like globality (as described above). It will rely on big data to help governments create smarter cities (in an increasingly urbanized world) and to help companies understand the nuances of a growing global middle class. That middle class needs to continue to grow if the global economy is going to expand and spur further prosperity. I agree with Saul that we are at a point of decision. He concludes:

"To believe in the possibility of change is something very precise. It means that we believe in the reality of choice. That there are choices. That we have the power to choose in the hope of altering society for the greater good. ... The conviction that citizens have such power lies at the heart of the idea of civilization as a shared project. And the more people are confident that there are real choices, the more they want to vote - a minimal act - and of greater importance, the more they want to become involved in their society."

Making communities, regions, and nations smarter and more prosperous requires the involvement of all stakeholders -- especially citizens/consumers. There are a number of analysts who believe that new technologies are going to transfer control over personal data to the individual. Saul certainly seems to be counted among that number. Access to that personal data will be critical if analytics are going to help us make smarter choices about the future. We have the opportunity to understand our world better and, thus, make better choices. What follows globalization? No one really knows; but, I don't believe the future needs to be scary. Tomorrow I'll discuss an article that has received a lot of attention. It involves a "5-point plan for a new globalism" suggested by Klaus Schwab, founder and executive chairman of the World Economic Forum.

Is U.S. Manufacturing on the Move? -- Part 2

"The sharp slowdown in U.S. manufacturing that began last spring appears to be over," writes Don Lee, "setting the stage for moderate expansion in the factory sector in coming months — with a little boost from companies bringing overseas production back to America." ["Manufacturers group forecasts moderate growth in coming months," Los Angeles Times, 10 January 2013] Lee's optimism stems from the results of a "quarterly survey by the Manufacturers Alliance for Productivity and Innovation, a trade group." He continues:

"The Manufacturers Alliance report found that 17% of companies with manufacturing operations abroad had brought some of that work back to the U.S. in the last two years. Such reshoring — or insourcing, as some people call the return of manufacturing from overseas — has been reported in isolated cases over the last few years, but there's been little in the way of comprehensive data about this phenomenon. The Manufacturers Alliance's survey sample was small — 42 large companies with operations abroad — but its findings nonetheless reveal what looks to be a continuing trend."

Like most other articles on the subject of reshoring, Lee details some of the reasons that companies are opting to return manufacturing to the U.S. They include rising wages in China and increased transportation costs. Lee also reports that supply chain risk management is playing an ever-larger role in such decisions. He explains:

"Apart from labor rates, U.S. companies moving production back also cited increasing shipping costs and, most notably, 'a desire to reduce supply chain uncertainty,' according to the Manufacturers Alliance study. Concerns about supply chain stability grew after Japan's massive earthquake and tsunami in March 2011 knocked out vital parts makers in auto, semiconductor and other electronics industries. Lower U.S. natural gas prices and other energy costs weren't mentioned in the reshoring."

Like the analysts cited in Part 1 of this series, Lee notes that workers shouldn't "count on reshoring to create a whole lot of domestic jobs or investment any time soon." He concludes, "Still, any little bit will help. American manufacturing employment has been trending down for decades amid productivity gains and growing foreign competition." As noted in the first segment of this series, a renaissance of American manufacturing is not guaranteed. In that post, I noted seven steps that Hal Sirkin, a senior partner at Boston Consulting Group, recommends America take to help the foster manufacturing's revival. But Sirkin isn't the only analyst who has given the matter some thought. Analysts at The Brookings Institute have also been busy considering the challenge. Mike Cassidy reports, "Brookings has come out with three policy briefs that look not at what is, in terms of manufacturing, but what could be, if the right steps are taken." ["Brookings Institution has some big ideas about helping U.S. manufacturing grow," SiliconBeat, 14 January 2013]

In the first of these policy briefs, Bruce Katz and Peter Hamp state that they believe "a 'race to shop' competition for advanced manufacturing should be initiated in order to expedite the transition toward a more innovative, productive, inclusive, and globally competitive American economy." ["Create a "Race to the Shop' Competition for Advanced Manufacturing," January 2013] They go on to state:

"The competition would challenge U.S. states and metropolitan areas to align their policies and investments to meet the distinct labor demands of their primary advanced manufacturing sectors and clusters. Winning applicants would not only receive resources for planning and implementation, but also increased flexibility in the use of existing federal workforce development skills and training funds."

They believe a competition is required because "the United States still lacks a coherent, overarching manufacturing strategy." The competition would require states and metropolitan areas to assess seriously exactly what constitutes their assets and challenges with regards to manufacturing. In past posts, I've noted that not all locations possess the same assets when it comes to establishing industrial clusters. Without a true assessment of what is likely to work in a particularly area, states and metropolitan areas are destined to be tossed about in a sea of uncertainty. The Brookings' proposal is for "an annual $150 million Race to the Shop competition to reform and modernize federal investments in workforce education and skills training for advanced manufacturing in the United States." Although Brookings has traditionally been considered a liberal think tank associated most closely with the Democratic Party, this proposal should be welcomed by both sides of the political spectrum. It strengthens state and local efforts, seeks targeted programs aimed at reducing unemployment and welfare rolls, and fosters the recovery of the American middle class.

In a second policy paper, Robert D. Atkinson and Stephen Ezell recommend designating "20 institutions of higher education as 'U.S. Manufacturing Universities.'" ["Support the Designation of 20 'U.S. Manufacturing Universities," January 2013] These federally-designated "Manufacturing Universities" would have to "revamp their engineering programs" by placing "particular emphasis on work that is relevant to manufacturing firms while providing engineering students with real-world work experience." In past posts, I have reported that manufacturers claim that new employees hired directly out of college face a skills gap (for example, see my post entitled Manufacturing and the Skills Gap). In those posts, I've recommended that the kind of public/private partnership being recommended by Brookings be established to address this challenge. I have also recommended that apprenticeships, like those that have traditionally supported German industry, be established. Atkinson's and Ezell's recommendation that students be provided with real-world work experience would go a long way towards achieving that goal. In fact, they write that designated universities "would view doctoral training as akin to high-level apprenticeships ... and would not allow the conferral of a Ph.D. unless one has done some work in industry." Atkinson and Ezell conclude that "it is simply impossible to have a vibrant national economy without a globally competitive traded sector." They also recognize how important urban areas are for the future of the country. They note that "over 80 percent of manufacturing jobs and 95 percent of high-tech manufacturing jobs" are located in urban areas. Brookings' analysts believe that the designation of manufacturing universities would help move revive manufacturing in urban areas that critically need employment opportunities.

In the final policy paper, Devashree Saha and Mark Muro recommend the U.S. Government build "a national network of advanced industries (AI) innovation hubs, expanding on the modest beginnings now being made through the Department of Energy's Energy Innovation Hubs program and the Department of Commerce's National Network for Manufacturing Innovation (NNMI) initiative." ["Create a Nationwide Network of Advanced Industries Innovation Hubs," January 2013] To learn more about the faltering start of the Energy Innovation Hubs program, read my post entitled Innovation Hubs and Regional Innovation Clusters. Saha and Muro concentrate on "advanced industries" because they claim such industries "punch well above their weight in building and expanding national and regional economic competitiveness." They therefore propose "that Congress authorize the build-out of a national network of advanced industries innovation hubs by funding at least five more Energy Innovation Hubs and supporting the creation ... of at least 20 institutes for advanced manufacturing innovation as proposed in the NNMI initiative." They conclude:

"Such centers will tackle the toughest problems with the biggest commercial pay-offs in technology and process development, technology deployment, and platform establishment. Because they will be regional and intensely collaborative, with strong private-sector participation, the hubs will produce substantial economic spillovers into the regional advanced industry clusters amid which they will be sited."

Taken together, Brookings' analysts believe these policy proposals will go a long towards ensuring that the U.S. has a robust advanced industries manufacturing future. Although each of these policy proposals comes with an initial price tag, all good investments do -- but good investments always pay off in the end. As Mike Cassidy concludes, "You've got to spend money to make money, as they say. And it turns out manufacturing jobs are particularly good jobs that produce products that can be exported, thereby reducing the nation's trade deficit. Manufacturing also begets innovation as those who make things work both on ways to make better things — and on better ways to make them."

Another analyst who offers some recommendations about manufacturing in America is Stephen Hoover, CEO of Xerox's PARC. He believes "we have an opportunity in the US to create and own the future of manufacturing." He calls it "Manufacturing 2.0." ["How the U.S. Can Reinvent Manufacturing," Techonomy, 8 September 2012] He writes:

"To realize this vision, businesses must start exploring new manufacturing technologies and business models, and US government needs to begin developing coordinated policies to support R&D, public education, and further investment in this new approach to manufacturing. There is great enthusiasm about exciting new developments in manufacturing including 3D printing, robotics, and printed electronics. These are important technologies, but we believe they are elements of a larger, end-to-end change in manufacturing, representing a radical shift from traditional approaches."

By and large, Hoover agrees with the analysts at Brookings. However, he describes a broad vision for manufacturing 2.0. He writes:

"A whole new ecosystem is arising, which will include social design, social funding, flexible and distributed supply chains, and more. This shift will ripple through the industry and likely threaten today's vertically integrated, large-scale manufacturing industry—much as the PC revolution threatened the mainframe computer industry. These democratizing technologies are a tremendous fount of innovation opportunities. As with most disruptive changes, new ways to fund, conceive, design, and build products means we will see entirely new markets develop, with brand new types of jobs originating right here in the US."

Hoover believes that new computer technologies will fuel the revolution in manufacturing; especially, "advances in computational reasoning, decision-making, and control that are quickly reaching human skill levels." He continues:

"A similar advance will soon enable 'intelligent software assistants' to work with human designers to convert design concepts into functional designs that can be manufactured at low cost. These capabilities will empower all kinds of people to design products and leverage complex production value chains. These automated assistants will frontload the design process, so mistakes can be made in the software, rather than in production. We will understand the actual manufacturing process in advance, including what will be made, how components will fit together, and whether the parts will work together safely and correctly and are manufacturable at a reasonable cost. If we get the computational interfaces and reasoning right, there can arise a massive, distributed network of manufacturers able to work together to create a dynamic supply chain for complex products like vehicles, airplanes, and consumer electronics—without needing a central organizing entity. These can be manufactured with traditional production technologies or newer methods such as printed electronics and other additive manufacturing techniques, and then shipped directly to end customers through third-party distribution channels. Such a shift has the potential to dynamically connect all types of manufacturers across the US and other countries to create whole new opportunities, markets, and jobs."

Hoover seems much more optimistic about job creation than most other analysts, even though he doesn't claim that all new jobs will be created in new factories. He concludes, "After years of recession, high unemployment, and fear of America's innovation and scientific downfall, Manufacturing 2.0 is on the horizon." He sees that as a good thing -- a very good thing.