Tag: Andrew McAfee

The Great Depression versus the Great Recession

One of the signposts at the beginning of 2012 is that the U.S. economy seems to be recovering. The troubles in the Euro-zone are still creating great uncertainty and people are still cautious. But manufacturing outputs are continuing to increase. I see “help wanted” signs starting to appear in business doors. (Feel free to disagree with this conclusion.)

One sign of trouble is that the unemployment rate is still very high. There are 6.6 million fewer jobs in the United States than there were four years ago. Some 23 million Americans who would like to work full-time cannot get a job.

Those of you following the macro-economic responses to 2008s Great Recession know that Ben Bernanke was a student of the 1930s Great Depression. One of the lessons he took away was that the Federal Reserve’s tightening of the money supply as a response to the economic conditions  helped cause the Great Depression. Bernanke took the opposite response at the beginning of the Great Recession and opened the monetary spigots wide open as a response to the woes of the financial sector in 2008.

Bernanke saved the banking system, but the economy is still stubbornly not creating new jobs.

The failure to create jobs is unlike any other post-WWII recession. Look at the percentage of job losses in this chart.  It’s not just a dramatic loss in jobs. There seems to be structural loss in jobs that the economy is not creating. You can see it in the numbers of the long-term unemployed.

It looks like something has changed in our economy.

Joseph E. Stiglitz, a man much smarter than me, has made some comparisons between the Greet Recession and the Great Depression in the December issue of Vanity Fair: The Book of Jobs. His theory is that the dramatic upheavals in the economy are a result of dramatic changes in the workforce.

Just before the Great Depression more than 1/5th of all Americans worked on farms. By comparison,today only 2% of Americans produce our food, plus a surplus to ship to other countries and to burn as fuel in our cars. Accelerating productivity before the Great Depression created a surplus of farm products, which lead to lower prices, which lead to a decline in farm incomes. Farmers had borrowed heavily to sustain production and were faced with the inability to pay back the banks. This swept the financial sector into the “vortex of declining farm income.” The 1930s America was moving from an agricultural economy to a manufacturing economy.

The parallel to 2008 is that the US economy has realized a tremendous increase in productivity in manufacturing. Contrary to popular opinion, American still has a robust manufacturing base. American manufacturing output has doubled since 1975.

We just don’t make as much of the same stuff as we did in 1975. Labor intensive products are made cheaper overseas. You won’t see the Made in the USA label very often on clothing, toys, and consumer electronics. It takes one third fewer people to manufacture twice as much stuff in America. Bruce Greenwald and Judd Kahn theorize that although the loss of jobs to overseas providers is significant, it’s the increase in productivity that caused most off the job losses in the manufacturing sector.

Andrew McAfee and Erik Brynjolfsson point out that the human workforce has to compete against the automated workforce of computers and machines. If a computer can do your job, then your job may be in danger. This is becoming increasing true in white collar jobs and not just manufacturing.

Stiglitz theory is that the cheap debt and rising home prices of the last decade allowed us to disguise the loss in jobs an income that came from the loss in manufacturing jobs. As a county, we were using our homes as piggy banks creating artificial demand. In 2008, the curtain was pulled back to reveal the true weaknesses in parts of the economy.

Perhaps it’s time to compare the abandoned farms of the 1930s to the abandoned homes of today’s Detroit.

What does this mean for compliance?

I’m not sure. Certainly, it will mean more changes. I expect we will continue to see changes in regulations and business practices as the government and industry grapple with the changes in the economy. We can already see in today’s Iowa caucus that the Republican presidential candidates most discussed topic is jobs. Politicians will continue to pin the blame on fat-cat bankers for quite a while. They make an easy target.

Sources:

Enterprise 2.0 – The Book

Enterprise 2.0 by Andrew mcafee

At the Enterprise 2.0 Conference in San Francisco, Andrew McAfee handed out a few copies of this new book: Enterprise 2.0. I was one of the recipients of a shiny new copy with his autograph on the cover page.

If you have heard of Enterprise 2.0, they you have heard of McAfee. He coined the term in his 2006 paper in the MIT Sloan Management Review: Enterprise 2.0: The Dawn of Emergent Collaboration.

You will enjoy the book. It pulls together all of the bits and pieces that he has said about Enterprise 2.0. Because even if you are familiar with McAfee and Enterprise 2.0, you have not had it all put together nicely in one place. I learned some great new things and was able to see some old things in a new perspective. This is the first book that puts it all into one place.

If you are not familiar with Enterprise 2.0, then you should definitely read this book.

We are at at the tipping point for a new way to communicate. Email was revolutionary when it came out. We could communicate using the internet. It was cheap and easy.

Now we are able to communicate using webpages. This a very different way to communicate than the pure back-and-forth of email and the letters that preceded email. The shift is from channel communications to platform communications, moving from inherently private communication to inherently public communication.

One of the challenges is that the innovation and lessons are coming from the public space into the enterprise. In the past, the innovation in communication technology came from inside the enterprise out to the public space. It used to be hard to establish an email account. You needed big servers and IT support from a company or university. Now you can establish a new email account in seconds from Google using gmail.

With these 2.0 tools we are seeing a reverse in the flow of technology. The internet has gotten much more efficient at finding information than the tools inside our enterprise. Is it easier to find information on the internet using Google or to find information in your corporate intranet?

Those of you who are familiar with McAfee or his blog will find some familiar passages.

  • There is a discussion of his SLATES perspective on the elements of Enterprise 2.0: Search, Links, Authoring, Tags, Extensions, and Signals.
  • The story of Wikipedia
  • The power of weak ties and the expansion of the Dunbar’s number
  • The evolution from the channel communication to platform communication
  • The success of Intellipedia among the intelligence community

McAfee also delves into compliance aspects of enterprise 2.0. In a discussion with the CIO of Dresdner Kleinwort Wasserstein, JP Rangaswami, they discuss how the platform communications of enterprise 2.0 makes compliance easier. Our current mainstream communication tools of email and IM are inherently private. Being private, they are harder to monitor. It’s also harder to spot misinformation, negligent information and bad acts. The more open platform communication of enterprise 2.0 allow more people to be on the lookout for bad patterns, misinformation and compliance issues.

The book takes you through the next big steps of adoption and outlines factors for success, overcoming the knee-jerk reaction to be private, counter fears of abuse, and overcoming the 9X effect for adoption.

The book is worth the purchase price and the time to read it, regardless of whether you are an enterprise 2.0 veteran or a newbie.

In the interest of disclosure, Andy not only gave me a copy of his book, but also autographed it. I’m easily swayed to write about something when it is given to me. He also supplied me with copious amounts of alcohol at parties after the Enterprise 2.0 Conference in San Francisco and the Enterprise 2.0 Conference in Boston. (Another surefire way to get my attention.) I also earn a fee from Amazon if you buy the book through the links in this article. You can judge for yourself if I am easily swayed to say nice things about the book.

References:

Enterprise 2.0 by Andrew McAfee

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I just read an early preview chapter from Andrew McAfee’s forthcoming book Enterprise 2.0: New Collaborative Tools for Your Organization’s Toughest Challenges. The book is scheduled for release later this year from Harvard Business Press. You can also download and read the preview chapter: Introduction of Enterprise 2.0.

Much like Professor McAfee, I too was a skeptic of how web 2.0 tools could be used inside a business. I started exploring these tools when my old law firm started to consider an upgrade of their intranet platform to SharePoint 2007. That software package has some basic enterprise 2.0 tools. If we upgraded, we would have blogs, wikis and RSS feeds as part of intranet platform. But I didn’t really know what they were or how they could help a law firm. At the time, the terms sounded like something out of a Dr. Seuss book. But I looked a little closer and saw that they had some potential.

I quickly discovered that two people I knew had blogs: Ron Friedmann’s Strategic Legal Technology and Joy London’s Excited Utterances. Originally, I thought they were just websites. (Does it really matter anymore?) I did a little more research and decided to try setting my own blog. I set aside an afternoon to set up a blog. Google claimed their Blogger platform was easy to set up and it was free. Instead of an afternoon, it took me ten minutes to set up the blog. Five minutes was spent figuring out a name and four minutes was spent choosing colors. That left a lot of time that afternoon to think about the implications of what I had done. This was the birth of my first blog, KM Space, in February of 2007.

I first encountered Professor McAfee at the Enterprise 2.0 Conference 2007.  Since then, we have had a few opportunities to talk about the implication of these tools inside a business.

I see transformational change in the availability of information. For decades it was business that had the powerful internal network that allowed them to share information across the enterprise. Now with the increasing ubiquity of internet access, the internal business network and tools that run on it are becoming inferior to the tools available through the internet for finding and dealing with information. There are many lessons for a business to learn from the consumer tools for handling information. This is big change.

The other aspect is email. Most businesses rely on email and attachments as their collaboration platform. If you look back 20 years, email was barely a factor in the way business teams collaborated. So there is no reason to think that email is either the endpoint or the zenith of the way business team collaborate.

Like Professor McAfee, I see a transformation change. I am looking forward to reading the Enterprise 2.0 when it is finally published.

Compliance for Enterprise 2.0 at Lockheed Martin

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Andrew McAfee, Associate Professor at Harvard Business School lead a discussion with Christopher Keohane, Social Media Program Product Manager at  Lockheed Martin IS&GS – CIO – Architecture Services and Shawn Dahlen, Social Media Program Manager, Lockheed Martin IS&GS CIO Office to talk about their Unity enterprise 2.0 platform at Lockheed Martin.

The Lockheed Martin guys really caught the attention of the crowd in their smaller session at the 2008 edition of the Enterprise 2.0 Conference. This earned them a seat on the big stage.

Business Case

They started with the business case. The 9-11 Commission noted that one of the problems was that information was siloed at the intelligence agencies. As a government contractor, Lockheed pays close attention to the government’s position. The appeal of a enterprise 2.0 / collaboration platform was the ability to create content and share it among the team.

In addressing the ROI concern, they made it easy by making a small investment. There was a budget available of a few thousand dollars for experimental projects. They got up and running in a small group with that small investment. [If your investment is small, the return does not have to be big to find a positive ROI. Start small.]

Legal Concerns

They knew legal would have questions and raise concerns. Christopher and Shawn approached them early to help with approval and buy-in. Legal was unfamiliar with the tools. But they were familiar with export laws, data privacy limitations and other considerations that needed to be in place.

Legal was able to help design the controls, processes, and procedures that would need to be in place to make Unity compliant with the laws that affect the internal operations of the company. They did not leave legal as a last minute approval to check the box. They got them engaged to help identify risks and problems.

[If you don’t bring legal into the process and leave them with a late in the process “yes” or “no” decision. You’re going to get a “NO!” Inevitably you will not have addressed an internal policy or regulatory concern. Especially if the project is being run out of the IT group, where they are often not involved in the business processes.]

Evolution versus Revolution

To echo the keynotes on Tuesday, Shawn and Christopher took an approach that was both evolutionary and revolutionary. Migrating from MS Word documents to blogs and wikis is evolutionary. Opening up the information for sharing is revolutionary.

The Generational Issue

Shawn and Christopher pointed out that the generational issue runs both ways when using 2.0 tools. They acknowledge that their team was a bunch of 20-somethings. They had trouble figuring out how to use these tools in the business setting. They had trouble using them to collaborate among themselves.

The older generation and managers of the business understand the business process. They were surprised that heir most prolific bloggers are 40-something senior managers. ( I am not surprised. I had the same experience at my old law firm when we started deploying 2.0 tools. The partners and senior attorneys contributed more information than the younger associates.) It is the seasoned workers who have the knowledge and understand the business needs.  If the tools are easy enough to use, they will use them.

Technology

They used Microsoft’s SharePoint as the platform for Unity. When pushed, they neither endorsed the product nor said anything bad about it. They did acknowledge the difficulty in trying to customize the platform for different groups. The users found the tools easy to use and easy to see the migration from Word to blogs and wikis.

[I had a discussion with Mary Abraham of Above and Beyond KM about the Snake Oil of Social Media.  As we became seasoned in our businesses, we learned to silo information because the technology siloed it for us. Email became our information source and collaboration tool. Email is inherently siloed. Trying to make it open does not work. My theory is that if you want to change the culture, you also need to change the technology tools.]

Summary

Sean and Christopher also found that you need to ground enterprise 2.0 in the needs of the business. Don’t be afraid of social media. Embrace it. Apply it to your business challenges.

McAfee Update

Professor McAfee is leaving Harvard next month to become a Principal Research Scientist within the Center for Digital Business at the Sloan School of Management. And his book, Enterprise 2.0, is coming out in the fall. You can download the first chapter for a sneak preview.

Other Coverage

Photo Credit

Thanks to Alex Howard of Digiphile and SearchCompliance.com for giving me permission to use his photo in this blog post.