Thursday, May 31, 2012

Recommendation of the week

The source is unknown - - but an important culinary doctrine:

"Although gas station tacos are generally excellent you should never get carnitas at a gas station that has clean squeegee water."

Getting the (electric) cart before the horse

Solving a host of engineering puzzles will require policy makers to consider the bigger picture.  An investment in A might also need a concurrent investment in B.  Or underinvesting in B has potential damaging consequences for the investment in A.  Or maybe investment B needs to be completed to fully recognize the benefits of investment A.  Remembering that the investment is the system - - A+B - - that seems to be a problem in many complex systems. 

Ron Adner of Dartmouth's Tuck School of Business makes this very clear in the May 30, 2012 issue of the Wall Street Journal - - Solving the Electric Car Puzzle:

" . . . while intense public attention and investment have been focused on rolling out plug-in charge spots, these efforts have been decoupled from investment in the smart-grid technology needed to assure that power generation and distribution can actually support mass charging.  As long as only a handful of drivers plug in each morning, the current grid will hold.  But if 5% of cars in Los Angeles County were to plug in simultaneously, they could place a 750-megawatt load on California's already strained grid, equivalent to the generating capacity of two mid-size power plants.  Unless the power infrastructure challenge is addressed in advance, the very success of the electric car will drive its failure."

It's all about understanding the system - - how you define the system and where you draw the system boundaries.  Defining the system as "the electric car" ignores the broader technology requirements and infrastructure necessary for the electric car to be an effective transportation alternative.

Great observation in the article - - success can drive failure.

Wednesday, May 30, 2012

Greece and the gas pump

The future price of a gallon of gas might just have a starting point in Athens.  The Financial Times highlighted this yesterday with an article, Need for funds is at its greatest.

"At the same time, the eurozone crisis is compounding concerns about the ability of Gulf petrostates and corporations to gain access to financing, as European banks pull back from the Middle East and north Africa.

The result, according to Moody's, the credit rating agency, is likely to be a "sustained reduction of lending" at a time when the Gulf Co-operation Council faces an estimated $1.8 trillion of capital investment over the next 15 years."

The perfect storm for much higher gasoline prices; increased global demand from the middle class of the developing world, at the same time you have a reduced supply of debt financing.  Asian financial institutions might be an alternative - - if not, Arab oil producing countries might be seeing the best and worst of times.  

Walmart and Property Values

You might want your next house close to a Walmart - - be sure and point this out at the P&Z meeting.

Tuesday, May 29, 2012

The Army Learning Concept for 2015

Engineering needs a new breed of strategic thinker.  Leaders that can find ways to be both adaptive and innovative when facing a complex and unpredictable world.  We need to think harder about the knowledge, skills, and attributes that a strategic engineering leader needs in the world today.

The U.S. Army is thinking about this same issue - - looking at a radical overhaul in all the army training programs.  This new approach to the development of strategic thinkers is detailed in the excellent - - The Army Learning Concept 2015.  The opening paragraph sets the stage for change - - all organizations must understand the ambiguous nature of strategic leadership in this century.  We must work to develop a more competitive learning model for strategic thinking and strategic leadership.

The opening paragraph - -

"The U.S. Army's competitive advantage directly relates to its capacity to learn faster and adapt more quickly than its adversaries.  The current pace of technological change increases the Army's challenge to maintain the edge over potential adversaries.  In the highly competitive global learning environment where technology provides all players nearly ubiquitous access to information, the Army cannot risk failure through complacency, lack of imagination, or resistance to change."

Institutional anxiety and comfort with the status quo impact all organizations in the context of change and developing a new type of strategic thinker.  The worst thing that can happen to an organization is to lose the instinct for strategic leadership - - where things like being inquisitive, creative, and innovative stop being the lifeblood of an organization.

US Public Infrastructure as Copacabana Skimpy

The American Society of Civil Engineers provides the public and policy makers with a periodic public infrastructure scorecard.  Accurate, complete, insightful - - just like we all remember our report cards from school.  ASCE utilizes a grading scale of A through F.  Some parts of the infrastructure matrix are dreadful - - as in D for dreadful.  Many components of our public infrastructure have a D year after year.  One conclusion you can draw is that D also stands for dull - - report cards modelled after something we didn't like to get in the second grade turns the dreadful into dull (and boring, meaningless, a poor education tool, etc.).  Ten years of a D grade should provide a moment of reflection - - bad student, bad teacher, bad environment, bad parents - - or some optimal combination of many different variables?

The current issue of the Economist has a profile of Brazil's richest man (The salesman of Brazil) - - Eike Batista and his effort to improve public infrastructure in Brazil.  This is the view of infrastructure from Brazil - -

"The EBX empire {company controlled by Batista} reflects Mr. Batista's understanding of Brazil's strengths and weaknesses.  The country has copious minerals; Mr. Batista extracts them.  It also has skimpy infrastructure.  Not Copacabana bikini, but far too slight for such a big place . . ."

If Brazil is not Copacabana skimpy in the context of public infrastructure, the United States is clearly not either.  Nor are we something from 1921 swimwear.  What we have managed to do is dull the public with something no one really likes in the first place - - the report card.  In the age of social media - - with the power of richer content fused with important context - - we still manage to bore the public. 

Dreadful news must not always be so dull - - drop the report card and walk along a Brazilian beach for inspiration.  People understand skimpy.  People will understand skimpy infrastructure.

Monday, May 28, 2012

It's having the right questions

Olin is a small undergraduate engineering school in Needham, Massachusetts, with a total enrollment of 350 students, 45% of them are women.  Dr. Richard Miller is Olin's founding and current president.  Olin aspires to "redefine" engineering as a profession of innovation encompassing (1) the consideration of human and societal needs; (2) the creative design of engineering systems; and (3) the creation of value through entrepreneurial effort and philanthropy.

Olin is the subject of a chapter in Tony Wagner's excellent Creating Innovators.  Miller was interviewed for the book and had the following comments:

"We're trying to teach students to take initiative - to transmit attitudes, motivations, and behaviors versus mere knowledge," Miller continued.  "Today, it's not what you know, it's having the right questions.  I see three stages in the evolution of learning.  The first stage is the memorization-based, multiple-choice approach, which is still widely prevalent; then there's project-based learning where the problem is already determined; finally, there's design-based learning where you have to define the problem.  That way of learning is part of every class here.  We are trying to teach students how to frame problems versus repeat the answers."

The Long Good-bye to Coal

This is an interesting article from Guy Chazan of the Financial Times (May 24, 2012) - - Shale gas boom leads to sharp drop in US carbon emission:

"The shale gas boom in the US has led to a big drop in the country's carbon emissions, as power generators switch from coal to cheap gas.

According to the International Energy Agency, US energy-related emissions of carbon dioxide, the main greenhouse gas, fell by 450m tonnes over the past five years - the largest drop among the countries surveyed.

Faith Birol, IEA chief economist, attributed the fall to improvements in fuel efficiency for transport and a "major shift" from coal to gas in power supply."

If you could "short" a state, your might think about shorting West Virginia.  Or maybe go "long" - - the article also pointed out that West Virginia supply still has a potential international demand:

"China's CO2 output increased 9.3 per cent last year, or by more than 700m tonnes.  India overtook Russia to become the world's fourth-largest CO2 producer, after China, the US and the EU."

The bottom line for coal and coal producing regions - - natural gas is fast becoming the fuel of choice for US energy in the past 12 months; coal-fired generation has slumped 19% while gas-fired usage has increased 38%, according to the US Department of Energy.  A gas-fired plant produces half the CO2 emissions of a coal-fired on.

A key issue to watch - - Royal Dutch Shell expects US natural gas prices to double by 2015, rebounding strongly from the current 10-year lows.  Look for LNG infrastructure to become a big deal - - with the US becoming a sizable exporter of LNG.

The Age of Coal has hit the twin walls of climate change concerns and the shale revolution.  The long-bye to coal has started.  We will be better off.

Sunday, May 27, 2012

Why smart countries make stupid mistakes

This is a great column from economist Tyler Cowen - - closing paragraph:

"What is most disturbing is that the euro-zone nations are democratic, protective of basic liberties, and have advanced intellectual and research communities. The final lesson of this debacle is that smart nations with noble motives can make very big mistakes. And that should concern us all."

Why inequality is about education

Inequality is increasing almost everywhere in the industrialized and postindustrial world.  The increase has been the greatest in the United States.  What's to blame for the widening inequality?

Education is part of the answer.  For all the talk regarding the inequality of the top one percent and the remaining 99 percent, the true gap is between the 45 million workers with a college education and the 80 million workers without one.  Our global "idea economy" combined with technological progress, globalization, outsourcing, and the shift away from traditional manufacturing industries have placed a premium on a college education.  Demand is up for engineers while the supply of unskilled jobs has declined.  The increasing gap reflects the growth in demand for college graduates with skills suited for a global economy (e.g., M.S. Computer Science from Stanford University) and the decline in traditional industries with unskilled labor (e.g., manufacturing and housing).

Consider Master Lock.  Its Milwaukee plant is operating at capacity for the first time in 15 years, before is started  sending work overseas.  It is producing much more stuff than it did back then.  But is is doing so with 412 workers - about 750 fewer than it had 15 years ago.  Or consider the case of Germany's Stihl in Virginia Beach.  The plant has 120 robots that run around the clock every day, with only seven workers on each shift.  Next year, the company plans to spend $10 million for machines and software that will allow the plant to double its output.  It will only need six more workers to do that.  Read that carefully again - - and remember that the annual compensation of the average employee at Microsoft is $170,000.

The following data by Enrico Moretti in The New Geography of Jobs may not be the complete story, but it is a large part of the book.  The data is the hourly average wage of men by education in 2011 dollars for all full-time workers aged 25-60.  The data is summarized in the following format - - 1980/2010/Percent Change (Note - the CPI averaged 3.21% annually during this 30-year period) - -

Dropout - - $13.7/$11.8/-14%
High School - - $16.0/$14.8/-8%
College - - $21.0/$25.3/+20%
Advanced Degree - - $24.9/$33.1/+32%

Are We England?

Interesting blog post and graphic on the decline of public infrastructure investment in the UK - -

Saturday, May 26, 2012

Where Engineers Gather

The TechShop chain is the modern watering hole for engineers and people who like to make things.  The average facility runs about 17,000 square feet and has the tools of the trade - - from sewing machines, metal lathes, and mills to $200,000 computer-controlled contraptions that can cut precise patterns out of metal.  For about $100 a month, you can become a TechShop member and use all of this equipment.  For an additional charge, you can attend classes that vary from Welding 101 to drawing 3D models on a computer.

Our innovative future probably starts at these types of watering holes.

Shifting from engineering manager to leader

Engineers face the multiple transitions from engineer to manager to leader.  The most challenging shift is the one from manager to the role of leader.  The engineer as project manager moving to department manager or the office manager moving to regional manager - - you need to understand that mastery of your function, organizational know-how, the ability to build and motivate a team - - are no longer enough.

Michael Watkins outlines the required leadership transition skills in his excellent June 2012 Harvard Business Review article - - How Managers Become Leaders.  Watkins narrows the transition to what he calls the "seven seismic shifts" - -
  1. Specialist to Generalist - - Understand the mental models, tools, and terms used in key business functions and develop templates for evaluating the leaders of those functions.  Engineering struggles with #1 - - which is a huge problem.  The education of an engineer is basically a process in which you learn everything about nothing (granted our leaders in Congress appear to have learned nothing about everything).  If you cannot make it past #1 - - you have a big problem.
  2. Analyst to Integrator - - Integrate the collective knowledge of cross-functional teams and make appropriate trade-offs to solve complex organizational problems.  The engineer that can move from analysis to synthesis - - from breaking things apart to one of putting things together - - has an important skill set on the road to leader.
  3. Tactician to Strategist - - Shift fluidly between the details and the larger picture, perceive important patterns in complex environments, and anticipate and influence the reactions of key external players.  For a profession all about the details - - engineers struggle with seeing the forest.  We seem unable or unwillingly to let go of the trees.
  4. Bricklayer to Architect - - Understand how to analyze and design organizational systems so that strategy, structure, operating models, and skill bases fit together effectively and efficiently, and harness this understanding to make needed organizational changes.  We don't get architecture, but we get effective and efficient - - which is a big help.
  5. Problem Solver to Agenda Setter - - Define the problems the organization should focus on, and spot issues that don't fall neatly into any one function but are still important.  We do problems - - our heart and soul is about the problem.  Leadership is about the question - - we need to get better at the questions (both in the context of leadership and things like climate change and sustainability).
  6. Warrior to Diplomat - - Proactively shape the environment in which the business operates by influencing key external constituencies, including the government, NGOs, the media, and investors.  Diplomacy, tact, and forbearance are not words one normally associates with engineering.  Engineers see the world in terms of black and white - - but the reality of our complex globalized world is much more a shade of gray.  Leadership is all about understanding the grayness of our organizations and world.
  7. Supporting Cast Member to Lead Role - - Exhibit the right behaviors as a role model for the organization and learn to communicate with and inspire large groups of people both directly and, increasingly, indirectly.  A huge problem for most engineers - - the words communication and inspiration don't automatically come to mind when you think engineer.

The Ripple Effect

The Ripple Effect Project is a collaborative effort among IDEO, Acumen, and others to improve access to safe drinking water.

Friday, May 25, 2012

The Art of Copying

The Schumpeter column in the May 12, 2012 edition of the Economist covered an important engineering topic - - Pretty Profitable Parrots.  The message might be heresy - - but business should celebrate imitation and being good at copying is at least as important as being innovative.  Copying is problematic on two fronts.  The first is the negative impact on organizational ego ("Innovator or die!!" - - imitators are cast as the villain).  The second is risk - - legal.  Although the Art of Copying is just that, art - - where one has plenty of wiggle room to imitate safely.

Consider this from the article - -

"As a result, firms pay insufficient attention to the art of copying.  Levitt (Ted Levitt, management guru) examined a group of companies whose sales depended on regularly launching new products.  None of them, he found, had either a formal or informal policy on how to respond to other firms' innovations.  So they were often far too slow to imitate rivals' successes, and missed out on profits.  Not much has changed since Levitt's day.  Though copying is fairly common, lots of companies fail to do it effectively.  American firms in particular are too obsessed with innovation, argues Mr. Shenkar (Oded Shenkar, management professor at The Ohio State University).  By contrast, Asian companies - such as Panasonic, whose former parent, Matshushita, was nicknamed maneshita denki, "electronics that have been copied" - have excelled at legal imitation.

Excessive copying, of course, could be bad for society as a whole.  Joseph Schumpeter worried that if innovators could not get enough reward from new products because imitators were taking so much of the profit, they would spend less on developing them (hence the justification for granting inventors temporary monopolies in the form of patents).  But that is not the immediate concern of corporations.  Copying is here to stay; businesses may as well get good at it."

Your Organizational Surface Area

Excellent observation from Neil Gershenfeld in When Things Start To Think - -

"I have a theory for why so many companies full of smart people persist in doing so many dumb things.  Each person has some external bandwidth for communicating with other people, and some internal processing power for thinking.  Since these are finite resources, doing more of one ultimately has to come at the expense of the other.  As an organization expands, the volume of people inside the company grows faster than the surface area exposed to the outside world.  This means that more and more of people's time gets tied up in internal message passing, eventually crossing a threshold beyond which no one is able to think, or look around, because they have to answer their e-mail, or write a progress report, or attend a meeting, or review a proposal.  Just like a black hole that traps light inside, the company traps ideas inside organizational boundaries."

It's About the Cycles

From a book review in the New York Times by David Leonhardt (Market Values) of the new book by Michael Lind - - Land of Promise: An Economic History of the United States:

"The notion that the United States has stopped making many large-scale investments that bring great returns is not, in Lind’s view, surprising. American economic history tends to run in cycles. Yes, our roads and bridges are dilapidated. Our broadband infrastructure is not quite world-class. Our schools, including many colleges, can no longer claim to be the finest. But the economic need for change will eventually create the political will for it. “Land of Promise” ends on as optimistic a note as the title suggests, though it also acknowledges that failure is an option."    

Storm Surge Big Data

Western Carolina University has developed a Web site and a smartphone app that makes it easier to predict coastal storm-surges.  Researchers gathered storm-surge data going back 65 years at more than 3,400 sites along the Atlantic and Gulf coasts.  The model is available at  Users can enter a zip code and view a map that shows all high-water measurements made in that area.  The site also illustrates the paths of the hurricane that caused those floods, along with other aspects that most likely influenced storm-surge height, including wind speed and barometric pressure.

Information technology requires information, and the most important information is about the state of the world.  Combine the "big data" movement of historical events with the era of infrastructure that actually starts to "think" and you end up with exponential improvements in system recovery during and after natural disasters.  Very important for engineers to consider in the context of climate change and the probability of much greater extreme weather events.

Thursday, May 24, 2012


Aquatest is a portable test for drinking water that contains multiple chambers in a single device.  Developed by the University of Bristol, designed by Kinneir Dufort, and funded by the Bill and Melinda Gates Foundation, 15,000 units have been tested since November 2011.  It is expected to be on the market in 2013, priced at about $4 per unit.

Key facts - -
  • Testing for the presence of E. coli in developing countries is labor-intensive and time consuming.
  • Typically the process requires a skilled technician, a lab, and a one-day turnaround.
  • The Aquatest design contains six plastic components.  The cap is removed and filled with water.
  • As the cap is closed, a special powder is released into the liquid, to grow the E. coli bacteria so they can be detected.
  • The cap is rotated to separate the sample into 11 chambers, allowing the user to quantify the number of bacteria in the sample.
  • The device is kept in a  flask-like incubator for 24 hours and a chemical in the powder turns contaminated chambers fluorescent under light from a UV source.
  • The cap is rotated again releasing a disinfectant that makes the device safe to throw away.

Miniwiz Sustainable Energy Development

Based in Taiwan, Miniwiz Sustainable Energy Development makes building materials from re-engineered rubbish.  One product, Polli-Brick, is a block resembling a square bottle made from recycled PET plastic, which is widely used to make food and drink containers.  Polli-brick can lock together without adhesive to form structures such as walls.  These are strong enough to withstand a hurricane.  The material greatly reduces the carbon footprint of a building and are about a quarter of the price of traditional building materials.  They are also translucent and can have LED lighting incorporated in them.

Wednesday, May 23, 2012

Training for 350 days

In Louisiana, a barber is required to train for 350 days as part of licensure prior to employment.  This is eight times what an EMT is required to complete.

Very interesting report - - taxes get all the press in terms of an economic burden, but excessive occupational licensing, such as interior designers for reasons of public health and safety, need greater attention.

Behavior Modification - - London Congestion Pricing

Link highlights the remarkable change in driving patterns and habits since the start of congestion pricing in London - - you can also link through to the complete study. The graphics tell the story.

Car & Driver(less)

Interesting web site - -

Also check out the review of Google's self-driving car - -

Engineers as the effect, not the cause

I would pick up a copy of The New Geography of Jobs by Enrico Moretti.  Moretti is professor of economics at the University of California, Berkeley.  The book examines the unprecedented redistribution of American jobs, population, and wealth.  The issue is not about cyclical change.  It is about a more complex, more interesting and more surprising shift.  We are experiencing structural changes.  The decline of Akron and the rise of Phoenix - - where Phoenix will triple or quadruple in size over the next thirty-year period.  It is a globe shift - - where Shenzhen's population has grown by 300 times in the same period.

The books details the centers of innovation - - the "new geography of jobs" - - places like San Francisco, Austin, Durham, and Boston.  Brain hubs - - where jobs in the innovation sector have been growing disproportionately fast.  The key to these brain hub jobs is human capital, which consists of people's skills and ingenuity.  People coming up with new ideas - - in very specific areas of the globe.

I really think this paragraph from the book is important - -

"If you take a walk in one of America's cities, most of the people you see on the street will be store clerks and hairstylists, lawyers and waiters, not innovators.  About a third of Americans work either for the government or in the education and health services sectors, which include teachers, doctors, and nurses.  Another quarter are in retail, leisure, and hospitality, which includes people working in stores, restaurants, movie theaters, and hotels.  An additional 14 percent are employed in professional and business services, which include employees of law, architecture, and management firms.  In total, two-thirds of American jobs are in the local service sector, and that number has been quietly growing for the past fifty years.  Most industrialized nations have a similar percentage of local service jobs.  The goods and services in this sector are locally produced and locally consumed and therefore do not face global competition.  Although jobs in local services constitute the vast majority of jobs, they are the effect, not the cause, of economic growth.  One reason is that productivity in local services tends not to change much over time.  It takes the same amount of labor to cut your hair, wait on a table, drive a bus, or teach math as it did fifty years ago.  By contrast, productivity in the innovation sector increases steadily every year, thanks to technological progress.  In the long run, a society cannot experience salary growth without significant productivity growth.  Fifty years ago, manufacturing was the driver of this growth, the one sector responsible for raising to wages of American workers, including local service workers.  Today the innovation sector is the driver.  Thus, what happens to the innovation sector determines the salary of many Americans, whether they work in innovation or not."

Tuesday, May 22, 2012

The impact of driving with no hands

This is an article from Timothy Lee who writes an excellent online Tech column for Forbes.  The online article - - How Self-Driving Cars Could Reshape Cites - - is provided below.  Interesting, especially when you start to see the connections and impacts to other parts of the urban infrastructure matrix.  For example, any reduction in parking has a profound impact on stormwater quality and quantity - - for the better.  This is important for engineers to study and think about - - new technology reshaping how we think about something as firm, stable, and historic as a city.

"Randal O’Toole suggests that self-driving cars will mean the death of mass transit. Matt Yglesias counters that the primary effect will be to dramatically reduce the number of parking spots. Here are some other likely effects on land use and commuting patterns:
  • Greater density around suburban subway stations. Right now, suburban subway stations tend to be surrounded by a sea of parking lots in order to accommodate riders who live too far from the station to walk to it. And that’s unfortunate because massive parking lots deter developers from building high-density housing within walking distance of the station. Self-driving cars solve this problem by making taxi rental cheaper than car ownership. In a world of ubiquitous self-driving taxis, there’s no reason to provide any parking spaces on the valuable real estate near a subway stop. So subway ridership is likely to go up even as more land is opened up within walking distance of suburban subway stations for apartments and businesses.
  • Virtually no parking spaces. Matt’s right about this, but I think he’s understating the phenomenon. It’s likely that once all cars are self-driving, we’ll barely need any off-street parking spaces at all. During peak periods, virtually all cars will be on the roads driving people around. During off-peak periods, cars will still be on the roads, they’ll just pull over to the side of the road and stop. As Brad Templeton points out in the middle of the night cars could double- or triple-park on 6- or 8-lane boulevards, park in front of driveways, and so forth. This won’t be a problem because they’ll be able to instantly get out of the way if they’re blocking the path of another car. So the only people who need off-street parking will be rich people who insist on spending extra for a private car rather than going the more affordable taxi route.
  • Higher road density. One of the benefits of self-driving cars will be that people can take exactly the right vehicle for each trip. Once likely consequence is that small, light vehicles will become viable for use in urban areas. And given that most cars at rush hour have a single commuter in them, that will create a market for half-width, single-occupant cars. These cars, combined with the superior driving skills of computers, will make it possible for two cars to drive side-by-side in a single lane. Also, the superior reaction times of self-driving cars, and their ability to warn each wirelessly about impending stops, means that self-driving cars will be able to safely maintain smaller following distances than human drivers can. Both of these effects will increase the throughput of each traffic lane, reducing congestion and making driving more attractive relative to mass transit.
  • More nimble “buses.” Current bus systems are designed to economize on one of their most expensive components: the human driver. Contemporary buses are enormous and run infrequently. At off-peak times, they’re almost empty. Buses that drive themselves will be dramatically cheaper to operate, which means that we’ll be able to afford many more of them. Instead of a full-size bus stopping every 15 minutes, it’ll be feasible to have a van stop every 3 minutes. And because each mini-bus will pick up fewer passengers, travel time will be lower. Indeed, it’s not clear that the concept of a “bus” will even make sense in a self-driving world. More likely, when you order a self-driving taxi with your smartphone, you’ll be offered several options. You might be offered a private taxi for $3, a taxi shared with one other person for $2, or a carpool van with several other people for $1. The dispatching software will be able to automatically group together passengers taking similar trips at the same time, so the carpool options shouldn’t add much time to the trip. With those low-cost options available, it’s not clear anyone would want to ride a bus.
To return to O’Toole’s original claim that self-driving cars will reduce demand for rail transit, I think it depends on which cities you’re talking about. In smaller metro areas, self-driving cars will likely make recently-built light rail systems look even more like white elephants, as the falling cost of taxi service and the reduction in congestion causes many rail customers to switch to them. As self-driving taxis become affordable even for poor commuters, smaller metro areas are likely to become even more car-focused and sprawling than they already are.

On the other hand, in larger metro areas the emergence of affordable taxi service may actually increase subway ridership, as more suburban residents take a taxi to their local subway stop and ride to work in the central business district. Indeed, the greater efficiency of self-driving transportation has the potential to dramatically increase the size and density of our largest cities. And that will make the rail transit systems of large cities like New York and Chicago more essential than ever."

Detroit, Michigan

It will be interesting to see if Detroit becomes the first major U.S. city to have 100% of its public services privatized - -

Monday, May 21, 2012

The Global Middle Class

Great article on the global middle class - - huge implications for engineering.

Supporting the public sector with better information

Very good article on the world of data analytics and visualization and the need for better data management technology in the context of the public sector - -

Designing Behaviors

Several very good comments and observations from IDEO CEO and president Tim Brown in the current issue of Rotman (The Merits of an Evolutionary Approach to Design) - -

"As designers become more involved in solving the world's wicked problems, an ability to deal with complexity becomes all the more important.  In my view, this indicates a paradigm shift for the world of design, because it demands a shift from thinking about the world in the way that Sir Isaac Newton encouraged us to think about it, to the way that Sir Charles Darwin thought about it.  Let me explain.

Newton's world was based on the assumption that we have an ability to predict the world based on actions in the present.  When we think this way, it encourages us to be top-down in our activities, to be predictive, to believe that we can imagine a complete system.  I would argue that the complexity we often face today requires us to think more like Darwin, who encourages us to think about constant evolution, emergent change, and the notion of unpredictability on a large scale, even if we understand things on a small scale."
Brown highlights some possible aspects of a more Darwinian approach to design:
  1. We should give up on the idea of designing objects and think instead about designing behaviors.  (This one might make people uncomfortable, but things like designing for sustainability are going to increasingly intersect with behaviors - - things like smart meters are about modifying behavior.)
  2. We need to think more about how information flows.  (Improving our health care system and general health of the public requires getting the right information, about the right issues, to the right people.  Engineering faces a host of better information flow problems.)
  3. We must recognize that faster evolution is based on faster iteration.  (This is a good point for engineering - - the idea we can launch things simply to learn from them is quite useful when we're thinking about increasing the reproductive pace of iteration in business.)
  4. We must embrace selective emergence.  (The scientific method is still important and still rules.  Even in engineering.  Embracing new ideas starts with asking the right questions, coming up with a better hypotheses, designing effective experiments, and more importantly, sharing what we learned.)
  5. We need to focus on fitness.  (Design starts with a clear purpose - - the overall mission of the organization must contribute and drive the purpose of the collective design process.)
  6. We must except the fact that design is never done.  (We are entering an era where the end user will have much greater opportunity to modify "the thing" post-design.  The entire life-cycle of "the thing" may be marked by the customer participating in the design.)

Searching for New (and Better) Ideas

 Instead of your normal annual conference or convention, consider something different as a potential source of inspiration, creativity, innovation, and new ideas.  The new conference experience can help with developing a higher sense of purpose and thinking about new problems/solutions and skills.  One key point - - engineers need to become much better at collaboration and stepping outside of their organizational and knowledge boundaries.  Look at the new conference experience as the intersection of different fields and perspectives.  The new conference experience exposes you to the nontraditional - - where the nontraditional can take you down different paths with richer connections and opportunities.  You can see and experience thinking and doing from people in fields and disciplines not directly related to yours - - ideas and thinking that you might be able to integrate into your career, industry, or organization.  Different conference content gives you the opportunity to see and experience different real world contexts.

Consider the following - -
  • Google Zeitgeist - Invite-only conference where speakers range from business leaders to politicians offering views on big global topics.
  • Like Minds - Annual UK event with an emphasis on participation promising "brain food" to help attendees build better businesses.
  • PSFX Conference - Claims to bring together creative thinkers and established and emerging business leaders.  This year being hosted in London, New York and San Francisco.
  • TED - Annual event in Long Beach, California and Europe (this year in Edinburgh) TED (Technology, Entertainment, Design) has become famous through its online videos that have been viewed by millions.  Has also inspired TEDx, independently organized events that are arranged arranged at a local level.
  • South By Southwest Interactive - Technology conference in Austin, Texas that grew out of the SXSW Film and Music festivals.  Has now expanded to include the broader digital entrepreneur community, who come to discuss new ideas.
  • The 99% - Annual event in New York focused on how to turn ideas into action.  The name is taken from the Thomas Edison quote that "genius is 1 per cent inspiration and 99 per cent perspiration."

Sunday, May 20, 2012

Engineering Wickedness

Engineering faces a host of global problems; what can be called "wicked problems."  Wickedness doesn't pertain to a degree of difficulty - - these problems are difficult because the traditional problem-solving process cannot resolve them.  Wicked engineering problems are messy and reactive - - from climate change to rebuilding our national infrastructure - - there is no single solution.  For problems like climate change and engineering for extreme weather events, defining the parameters of the problem itself is often half the challenge.

The ten characteristics of wicked problems that engineers need to understand are as follows:
  1. There is no definitive formulation of the problem itself.
  2. There is no stopping rule.
  3. Solutions are not true-or-false, but good-or-bad.
  4. There is no immediate or ultimate test of a solution.
  5. Every solution is a "one-shot operation" in that every attempt counts significantly.
  6. Wicked problems do not have an enumerable set of potential solutions, nor is there a well-described set of permissible operations that may be incorporated into the plan.
  7. Every wicked problem is essentially unique.
  8. Every wicked problem can be considered to be a symptom of another problem.  (This one is really important.  Take urban planning, for instance.  Look around your city and you will see countless examples of the unintended consequences of a failure to understand a complex system.  Engineering still thinks in terms of the "script" and "silo-planning" - - but never system connections, interfaces, and overlaps.)
  9. The existence of a discrepancy representing a wicked problem can be explained in numerous ways.  The choice of explanation determines the nature of the problem's resolution.
  10. The [decision maker] has no right to be wrong.
Source - - From Dilemmas in a General Theory of Planning by Host Rittel and Melvin Webber, Policy Sciences, Vol 4, Elsevier Publishing, 1973.


This is an interesting company with an interesting solution to a problem for half the planet.  The problem is the sick home and the solution comes from a Spanish firm - - Inesfly.  Historically the solution to contolling mosquitoes that cause malaria and dengue are nets and sprays.  The founder of Inesfly is Spanish chemist Pilar Mateo and she has come up with a very innovative solution.  She has invented a way to embed pesticides in microcapsules stirred in to house paints.  The insecticides are released from the paint slowly, remaining effective for two to four years.  The small amounts of pesticides released from the paint aren't harmful according to independent research. 

The paint and process is already approved in 15 countries.

Check out Killing Bugs by Painting Your House in the May 21, 2012 issue of Bloomberg Businessweek.

The world in 25 years?

Forecasts for the next 25 years from the World Future Society - -
  1. The dust bowls of the twenty-first century will dwarf those seen in the twentieth.
  2. Commercial space tourism will grow significantly during the coming decade.
  3. Nanotechnology offers hope for restoring eyesight.
  4. Robotic earthworms will gobble up garbage.
  5. Learning will become more social and game-based, an online social gaming may soon replace textbooks in schools.
  6. Lunar-based solar power production may be the best way to meet future energy demands.
  7. Machine vision will become available in the next 5 to 15 years, with visual range ultimately exceeding that of the human eye.
  8. Advances in fuel cells will enable deep-sea habitation.
  9. Future buildings may be more responsive to weather fluctuations.
  10. The end of identity as we know it?  It may become very easy to create a new identity (or many identities) for ourselves.
  11. The U.S. rich-poor gap is another disaster waiting to happen - - probably around 2020.
  12. Dig very deep, and you will find enough geothermal energy to power the world.
  13. The future is full of bicycles.
  14. The Internet will automatically search itself so you don't have to.
  15. Livable, economically viable manufacturing site could be built on the Moon.
  16. Look for surprising strategic alliance across the globe.
  17. Robotic surgeons will use bioprinters to repair and replace your organs.
  18. Humans will eventually "lose" the race with robots.
  19. Climate change threatens to displace up to 70 million Bangladeshis.
  20. Future human societies may be divided between augmented and nonaugmented breeds.

The Seven Survial Skills

From Tony Wagner and his excellent Creating Innovators - - the new skills all students now need for careers, continuous learning, and citizenship in a flat world driven by global innovation:
  1. Critical thinking and problem solving
  2. Collaboration across networks and leading by influence
  3. Agility and adaptability
  4. Initiative and entrepreneurship
  5. Accessing and analyzing information
  6. Effective oral and written communication
  7. Curiosity and imagination
The world has become more Darwinian (i.e., evolutionary change and nonlinear adjustments) and less Newtonian (i.e., driven by predictable rules and outcomes).  Individual growth and organizational sustainability rests with becoming the best, the smartest, the fastest.  The Wagner 7 fundamentally moves the focus back to becoming better, smarter, and faster.  The seven also apply to the collective - - to organizations and companies.  Things like collaboration, agility, entrepreneurship, turning data into knowledge, and market signaling will also drive organizational performance. 

Saturday, May 19, 2012

Withdrawal Pain

Logistics in warfare still matter.  They matter at the start, in the middle, and as the Financial Times reported last week, they matter at the end (May 17, 2012 - Bringing It All Back Home, by Carola Hoyas).  The article highlights the complexity and cost of pulling $60 billion worth of equipment (total coalition forces) out of the landlocked war zone of Afghanistan.  Complexity, cost and a simple fact - - "No army has retreated from Afghanistan without coming under fire" - - all drive the arithmetic of the operation.

Geography provides an answer to the scope of the problem.  There is an accessible port to the south at Karachi in Pakistan.  This would be the quickest and cheapest - - but also subject to risks of heavy insurgent attacks.  The "northern distribution network" is an alternative - - via Central Asia.  This route offers autocratic regimes, steep mountains, and criminal networks (per the travel guides).  The Pakistan border is currently closed, but could reopen.  The political terrain of this route looks ugly. 

Interesting facts regarding the scale of the operation - -
  • Value of the U.S. equipment - $49 billion.  This conflict has required vastly more equipment (the article never really details why - - the "why" has a profound impact on our economic and national security).  Most of the equipment would be of little value to the Afghan military (but a gold mine to the global black market arms trade).
  • Value of the coalition force equipment - $60 billion.  This includes 70,000 vehicles.  Equipment will be packed into 130,000 containers.  Assuming half the value can be packed into containers - - each container would have an equipment "value" of $230,769.
  • If the Pakistan border does open, the daily "transit fee" demanded by Pakistan is $1 million.
  • Annual U.S. funding for transit countries - $500 million (not sure the who, what, and why from the article on this line item - - remarkable when a number like $500 million looks like a rounding error in the context of a $60 billion bill).
  • Railways are decrepit in the region - - the political leadership refuses to ride on the trains.
  • Cost of shipping one container via the northern distribution network - - $17,500 (shipping all 130,000 containers this route would cost $2.3 billion).  Roughly 8% of the value of a fully loaded container.
  • Cost of shipping one container via the Pakistan route would cost $7,200 (total of $936 million - - what are friends for if they cannot help you save $1.33 billion).


The word of the week is "sustainment" and it comes from a report (A National Strategic Narrative) by Captain Wayne Porter and Colonel Mark Mykleby.  Both worked as special strategic assistants to Admiral Mike Mullen, the former chairman of the Joint Chiefs of Staff.  The report and word "sustainment" has gained considerable attention.  Porter and Mykleby argue that we must move from a policy of containment to one of "sustainment."  To increase our national security, our first priority should be "intellectual capital and a sustainable infrastructure of education, health and social services to provide for the continuing development and growth of America's youth . . . We are losing our traditional role of innovation, dominance in leading edge technologies and the sciences."

The world of health care reform and solar panels on my roof comes to the world of the hand grenade.

Video link to a presentation by Porter and Mykleby - -

Titan Salvage

Titan Salvage, based in Florida, will begin salvage operations on the luxury liner Costa Concordia next week.  The liner ran aground in January off the Tuscan coast.  This will be the largest ship removal by weight (estimated to weigh 94,000 tons, 6,000 of which are water and debris) in history.  The cost is estimated to be $300 million - - more than half the value of the ship, and will be covered by it's insurers.  Authorities wanted to have it removed in one hunk, versus cutting the ship into sections.  Titan is set to stabilize the ship by the end of August and then start building the underwater platform to help rotate the vessel.  During salvage operation, oil-response equipment and devices will be in place - - water quality will be monitored daily.

Titan also wins the Jim Collins Hedgehog Mission Statement of the week award with their - -

To be a global leader in the markets of salvage, wreck removal and maritime emergency response by providing world-class services that ensure long-term company durability while ensuring the safety of our people, the public, and the environment.

Friday, May 18, 2012

Amazon's 14 Leadership Principles

These are the 14 leadership principles that every Amazonian is guided by - -
  • Customer Obsession - - Leaders start with the customer and work backwards.  They work vigorously to earn and keep customer trust.  Although leaders pay attention to competitors, they obsess over customers.
  • Ownership - - Leaders are owners.  They think long term and don't sacrifice long-term value for short-term results.  They act on behalf of the entire company, beyond just their own team.  They never say "that's not my job".
  • Invent and Simplify - - Leaders expect and require innovation and invention from their teams and always find ways to simplify.  They are externally aware, look for new ideas from everywhere, and are not limited by "not invented here".  As we do new things, we accept that we may be misunderstood for long periods of time.
  • Are Right, A Lot - - Leaders are right a lot.  They have strong business judgment and good instincts.
  • Hire and Develop the Best - - Leaders raise the performance bar with every hire and promotion.  They recognize exceptional talent, and willingly move them throughout the organization.  Leaders develop leaders and take seriously their role in coaching others.
  • Insist on the Highest Standards - - Leaders have relentlessly high standards - many people may think these standards are unreasonably high.  Leaders are continually raising the bar and drive their teams to deliver high quality products, services and processes.  Leaders ensure that defects do not get sent down the line and that problems are fixed so they stay fixed.
  • Think Big - - Thinking small is a self-fulfilling prophecy.  Leaders create and communicate a bold direction that inspires results.  They think differently and look around corners for ways to serve customers.
  • Bias for Action - - Speed matters in business.  Many decisions and actions are reversible and do not need extensive study.  We value calculated risk taking.
  • Frugality - - We try to spend money on things that don't matter to customers.  Frugality breeds resourcefulness, self-sufficiency and invention.  There are no extra points for headcount, budget size or fixed expense.
  • Vocally Self Critical - - Leaders do not believe their or their team's body odor smells of perfume.  Leaders come forward with problems or information, even when doing so is awkward or embarrassing.  Leaders benchmark themselves and their teams against the best.
  • Earn Trust of Others - - Leaders are sincerely open-minded, genuinely listen, and are willing to examine their strongest convictions with humility.
  • Dive Deep - - Leaders operate at all levels, stay connected to the details and audit frequently.  No task is beneath them.
  • Have Backbone; Disagree and Commit - - Leaders are obligated to respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting.  Leaders have conviction and are tenacious.  They do not compromise for the sake of social cohesion.  Once a decision is determined, they commit wholly.
  • Deliver Results - - Leaders focus on the key inputs for their business and deliver them with the right quality and in a timely fashion.  Despite setbacks, they rise to the occasion and never settle.

Thursday, May 17, 2012

Engineering and The Last Mile Problem

Engineering faces a host of "last mile" issues and problems that will grow as energy costs increase in the coming years and decades.  The term "last mile" historically has been associated with communication - - the final leg of delivering connectivity from a communications provider to a customer.  It is typically seen as an expensive challenge because "fanning out" wires and cables is a considerable physical understanding.

But the "last mile" problem impacts a whole host of industries and behaviors in the context of cost and efficiency.  The issue becomes one of economies of scale - - where economy of scale makes an increase in capacity of a conduit or logistical network less expensive as the capacity is increased.  Our current global logistical supply-chain is basically the movement of goods and information from high capacity, long distance paths to one of lower capacity, short distance paths.  There is an overhead associated with the creation of any logistical system or conduit.  This overhead is not repeated as capacity is increased within the potential of the technology being utilized.

In the context of the high capacity, long distance path - - larger ships and huge economies of scale (the new 1,312-foot EEE class ship is designed to hold 18,000 containers, some 2,500 more than the largest vessels today can hold) are the norm with ocean transport.  Typical amounts paid for goods to reach Europe or the United States via ocean transport are (Source - - May 21, 2012 Fortune, The Chartist/The Shipping News):
  • Television Set - - $10
  • 100 Pounds of Coffee - - $6.80
  • DVD Player - - $1.50
  • Vacuum Cleaner - - $1
  • Six Bottles of Whisky - - $0.90
  • Barrel of Oil - - $0.80
  • Six-Pack of Beer - - $0.06
A six-pack of foreign brewed beer is a good example of the last mile or so problem and the disruptive nature of logistical economies of scale.  Assuming my trip to the local grocery store is four miles, at 14-miles to the gallon, and $4.00 per gallon of gasoline - - the $8.00 six-pack will have a final logistics cost of $1.14.  This is close to 20 times the cost of the first thousand or so miles across the ocean. 

Public transportation is another example of the last mile problem.  Huge economies of scale in transporting the public in mass - - but in lower density areas and neighborhoods, you still have the problem of the last mile (or five or ten).  How do you travel the last mile home and what is the cost?

Online retailer Amazon has been a major force in challenging the economics of the last mile.  Need a new pair of shoes?  They probably came to the U.S. for pennies from China - - yet you have to drive the last 10-miles to pick them up.  Amazon and UPS have basically built a higher capacity, longer distance conduit directly into your closet.  The next challenge for Amazon and UPS is the logistical conduit directly to my cooler and frig.

Wednesday, May 16, 2012

Strategic words and phrases for the decade (and beyond)

My sampling of several key strategic words, phases, and ideas you might want to be thinking about this decade - -
  • Envision - - More of an emphasis on imagination when thinking about the future.  A thrust and focus on reframing what might be possible in the future.  Don't predict, but don't ignore the extremes of your opportunities (and threats).  Key question - - "How do you measure the return on investment of reframing of the way you look at the world?"
  • Change is Here - - The acceleration of history is a disruptive strategic force.  We exist in a moment and movement of constant change.  The more you except this, the greater will be your opportunities.
  • Architectures of Collaboration - - How you interface and share ideas will define who you interface and share ideas with.  The power of global collaboration will produce a vast, innovative, and collaborative network of "who" you know people with "what" you know people.  Setting on the collaboration sideline is not an alternative.
  • Linkages - - It is about your strategic network.  Unique value will be generated in a global web of nodes and linkages.  The quality of your connections will determine your unique value.  Your connected world provides the mechanism for going from dreaming big to doing big.  Companies and individuals will be defined and measured in terms of the quality of their strategic linkages in a global network dominated by "who" and "what."  The "why" of strategy moves much closer to "who" and "what."
  • Private/Public Interface - - The developed world is broke or will be broke; austerity will reign.  Success will belong to those organizations that can negotiate the complex private/public interface - - where private investment flows in support of public goods and services.   Your unfixed pothole represents the pinnacle of the private/public interface and opportunity.
  • Adaptable - - Constant change will produce organizations that are both strategically adaptable and flexible.  The power of resilient organizations and individuals will rule - - those that face barriers, yet still move forward.  Strategic agility is closely linked to adaptability - - agility requires organizations to be both contextually specific and conceptually abstract in their strategic language
  • Think Bravely - - Living in a brave new world will require brave new thinking.  Being brave means challenging taken-for-granted assumptions.  Everything is fast-changing and highly competitive.  Strategic courage will be required.
  • End User - - The focus will be on the hole.  The electric drill might have seemed important last decade - - but all the customer or client really wants is a two-inch hole.  They want a hole, on time, on budget, that meets their performance requirements.  Don't be in the middle between the drill and the hole - - you will get marginalized.  The end will be the beginning.
  • Culture and Brand - - Your only strategic constants are your organizational culture and values combined with your brand.  The external environment is rapidly changing and challenging - - but the internal glue that supports and holds this all together needs to be stronger than ever.  Thing of your culture and brand as the gorilla glue for strategic management.
  • Unique Value - - Value is out, "unique value" is in.  Being different and unique are the cornerstone of a foundation for being great.  Being great will be a function of creating "unique value" - - the more of a "monopoly uniqueness" you can create, the greater you will become. 
  • Social Well-Being - - The two columns of growth and prosperity will need a third leg - - social well-being.  All of your strategic stakeholders will demand a sustainable future.  You must build for the long term.  You must be fair and ethical in all your dealings.  You must benefit the local communities in which you operate.
  • Size versus Signals - - Get past the strategic implications of big, small or someplace in the middle.  Signals will trump size.  Your reputation is indivisible.  Your reputation relies on the actions and signals of every employee.  Strategically manage your signals in a new world of social media.  Tell (and sell) the world your story. 

Exporting Water

Estimates of water use in the United States indicate 566 billion cubic meters per year (410 billion gallons per day) were withdrawn in 2005 (The latest USGS report - - Estimated Use of Water in the United States in 2005).  The breakdown by user segment in billion gallons per day:
  • 349 billion gallons per day freshwater withdrawals
  • 79.5 billion gallons per day fresh groundwater withdrawals
  • 270 billion gallons per day fresh surface-water withdrawals
  • 201 billion gallons per day thermoelectric-power generation withdrawals
  • 128 billion gallons per day irrigation withdrawals
  • 44.2 billion gallons per day public supply withdrawals
  • 18.2 billion gallons per day of industrial self-supplied withdrawals
  • 4.02 billion gallons per day of mining related withdrawals
  • 2.14 billion gallons per day of livestock withdrawals
  • 8.78 billion gallons per day of aquaculture withdrawals
The idea of a water export (or import) comes from exported food and products - - the United States exports water to other countries mainly via meats and cereals (your basic hamburger required 150 gallons of water to make it out the drive-thru at McDonald's).  Estimates of the U.S. virtual water exports are approximately 80,000 million cubic meters per year (See June 2012 issue of Scientific American, Water In, Water Out - - graphics are from the article).

Exports are roughly 14% of total annual U.S. water withdrawals.  Most of our virtual exported water comes from irrigation (176.8 billion cubic meters per year) and livestock (2.95 billion cubic meters per year).  Total U.S. water exports are 45% of the irrigation and livestock totals.

By comparison, the U.S. imports about 136.75 billion gallons of oil per year - - for every gallon of virtual water the U.S. exports, we import almost two gallons of oil.

By Narrative Science

Link to the Forbes article and the byline - - By Narrative Science.  Narrative Science is not a person, but a thing.  The world of algorithms comes to journalism. 

What is next?

Tuesday, May 15, 2012

Baseball been very, very good to me . . .

From the Harvard baseball team - - great example of multidisciplinary skill sets.  But seriously - - the bottom line is that U.S. engineers must be well-rounded and have additional skills if they are to justify the higher wages that we hope to command.  Our multidisciplinary education must be inclusive of communication skills, ethics and professionalism, and leadership.  We live in a world of transnational issues as, for example, climate change, decaying infrastructure, natural disasters, homeland security, widespread poverty in underdeveloped nations, an increasing demand for potable water - - issues that cannot be solved by a single discipline or profession alone.  The future belongs to those engineers that can broaden their skill sets - - just like the Harvard baseball team!

The Australian Dollar

Good observation from Jim O'Neill (who I think is the Goldman Sachs economist who coined the term BRIC to describe the developing countries of Brazil, Russia, India, and China) in his The Growth Map: Economic Opportunity in the BRICs and Beyond - -

"I know some very smart people around the world who tell me that the best way to play the growth of China and India is to just trade the Australian dollar.  I'm not sure I agree, but if you look back you can see how dramatically Australia's trading relationships have changed.  Australia used to be regarded as a good lead indicator of the economic fate of the United States.  Not anymore.  Its largest export partners, in order of size, are now China, Japan, South Korea, India and then the United States.  These days, Australia is looking ever more to the rapid growth in Indonesia, which is just three hours away.

Australia will be in an incredible position for years to come, as it is rich in commodities and surrounded by fast-growing economies.  The top end of the Sydney property market is already dominated by Chinese money, and I anticipate that becoming more true."

Monday, May 14, 2012

Engineering and The Kentucky Derby

The recent Kentucky Derby had an engineer move closer to the winner's circle with Daddy Nose Best - - owned by SMU alum and civil engineer Bob Zollars.

Zollars is the CEO of Dallas headquartered Huitt-Zollars.

Saturday, May 12, 2012

The Top 37

The top 37 global cities and what they will look like according to a United Nations study - -

The Art of a Sale

This should be required reading for all engineers - - The Art of the Sale: Learning from the Masters About the Business of Life by Financial Times writer Phillip Delves Broughton.  The book contains a wonderful story about an undergraduate engineering entrepreneurial class taught at Princeton University (Professor Dan Nosenchuck).  The class teaches sales techniques (which is remarkable for a university level course, but even more remarkable for an engineering class) - - Sully Sullivan of informercial fame and professional "pitchman" guest lectures!!!

More from the book:

"At its most basic and technical, selling is about understanding a customer's needs and delivering a product to meet them.  There are three pieces to this.  The first is economic: what the customer is willing to pay and the price at which you are willing to sell.  The second is structural, to do with the process of selling.  A quick, one-off sale in a store is very different from months-long sale to a company, where you have to deal with numerous people in various stages.  The final piece is psychological: the battle of wits, personality, and emotion between the seller and the buyer.  In every sale, these three elements are tightly interwoven.  In most retail stores, for example, the salesperson must make quick judgements about who the customer is, what they need from both the product and the sales process, and what they're willing to pay, before he handles their objections and tries to close them on a sale.  One classic formulation of this process is AIDA: attention, interest, desire, and action.  It was first proposed in 1898 by E. St. Elmo Lewis, a writer and early proponent of the educational benefits of advertising.  The salesperson stokes up the customer, gets their attention, then turns interest into desire, and finally gets them to buy.  In a longer sales cycle, the same process is drawn out over weeks and months.  Instead of having to make quick judgements, salespeople can ask questions and try to elicit and develop customer's needs.  "If you need this," they might say, "then you'll also need needing this!"

The big organizational sale is an expansion of these basic steps.  Benson Shapiro and Ronald Posner broke the big corporate sale into eight separate tasks.  The first is to open the process by learning there's a potential sale.  Leads can emerge from cold-calling, referrals, or more sophisticated profiling.  Next, you must qualify your prospect and define the extent of their potential.  Is it a long shot or a slam dunk?  Who needs to be sold and how?  Then comes the sales strategy, in which you plan your campaign, listing your contacts, your meetings, your information and to-dos.  Are you targeting the right people?  Do they have control over the checkbook?  What will you need from your organization to make this happen?  Then you organize the justification for the sale by imagining yourself in the buyer's shoes and figuring out how they can explain this purchase to themselves and their colleagues.  With the planning over, you move into the trenches by pitching your potential client.  By this time, you should have all the relevant decision makers in the room, fully briefed on what this sale is all about.  You take any feedback and return to your own company to gather the resources and people it will take to satisfy the customer.  And then you close.  By this time, it should not be a surprise if the sale is make or not, because you have lived the process for months.  The eighth and final phase is nurturing the account relationship, making sure the customer is happy and keeps buying for years to come."

The Commencement Address

From 10 Things Your Commencement Speaker Won't Tell You by Charles Wheelan (The Wall Street Journal April 28, 2012) - -
  1. Your time in fraternity basements was well spent.  (Mine was!!!)
  2. Some of your worst days lie ahead.  (And some of your happiest - - regardless of the problem, things will look better the next day.)
  3. Don't make the world worse.  (I didn't.)
  4. Marry someone smarter than you.  (Wife is a member of Mensa.)
  5. Help stop the Little League arms race.  (Son played second base.)
  6. Read obituaries.  (I do - - see below for why.)
  7. Your parents don't want what is best for you.  (Mom wanted a history professor.)
  8. Don't model your life after a circus animal.  (I don't do tricks for peanuts.)
  9. It's all borrowed time.  (I passed the "hit-by-a-bus" rule.)
  10. Don't try to be great.  (Happy and unique trumps great.)
The material associated with # 6 - Read obituaries:

"They are just like biographies, only shorter.  They remind us that interesting, successful people rarely lead orderly, linear lives."

One final note.  From 0-18 years old, the system tends to want to make everyone the same.  Generally the three P's drive this - - parents, process, and peers.  From year 18 on forward - - the process becomes a quest to be different and unique.

Friday, May 11, 2012

A Question of Trust

A very good article in the current issue of the Economist (Investing in Infrastructure) - - details efforts in Chicago.

The complete article - -

FOR decades America has underinvested in infrastructure—even though poor roads, delayed flights, crumbling bridges and inefficient buildings are an expensive burden. Deficiencies in roads, bridges and transport systems alone cost households and businesses nearly $130 billion in 2010, mostly because of higher running costs and travel delays. The calculated underinvestment in transport infrastructure alone runs to about $94 billion a year. This filters through to all parts of the economy and increases costs at the point of use of many raw materials, and thereby reduces the productivity and competitiveness of American firms and their goods. Overall the American Society of Civil Engineers reckons that this underinvestment will end up costing each family in the country about $10,600 between 2010 and 2020.
Yet though investment in infrastructure would bring clear gains in efficiency, there is little money around, and all levels of government are reluctant or unable to pile up more debt. Traditional sources of funding, such as the (flat) tax on petrol, have delivered a dwindling amount of revenue as soaring prices at the pump have persuaded people to drive less. The federal government has been unable to get Congress to agree on other ways to generate new sources of funding for transport, to the point where money for new highways has almost dried up.
For years America has talked about a federal infrastructure bank, which would blend private and public finance and would yield returns over a long number of years. Various other countries have tried the idea, but it has never caught on in the United States. Barack Obama wants $10 billion in funding as initial capital for a national infrastructure bank as part of his jobs plan. So far the idea has gone nowhere in Congress.
In March the mayor of Chicago, Rahm Emanuel, announced that his city could not wait for such help from elsewhere and will go it alone. With the speedy approval of the city council he created a new breed of infrastructure finance known as the Chicago Infrastructure Trust (CIT). The trust is not so much an infrastructure bank with money to hand out, but a city effort to match public infrastructure needs to private investors on a case-by-case basis; something more like an exchange. The city will finance the running costs of the trust itself to the tune of $2.5m. Several financial institutions are already lined up to make investments totalling $1.7 billion, among them Macquarie Infrastructure and Real Assets, Ullico, Citibank and JPMorgan.
The background to this is that Mr Emanuel wants to spend about $7 billion to rebuild the city of Chicago—on everything from streets, to parks, to the water system, schools, commuter rail and the main airport. Tom Alexander, a spokesman for the mayor, says the city cannot ignore the future as it deals with the present. But raising the money needed for new investment, while maintaining the current infrastructure, is a daunting task.
The CIT allows Mr Emanuel to tap the private sector for money, rather than just raising taxes and borrowing. The private sector will invest money in projects and get it back in the shape of tolls, user fees, premium pricing or even tax breaks.
The first project is an investment of $225m to make city buildings more energy-efficient. This is expected to reduce annual energy costs by $20m, and the savings will then be used to pay back the investors. The CIT will provide some capital, bond financing and grants. It will also offer tax-exempt debt to entice investors. Returns on investment could vary from 3% on tax-exempt bonds to 8% for equity partners.
Private involvement should, in theory, improve the quality of projects that get undertaken. A politically-expedient but financially dubious project would be unlikely to generate enough money to interest private investors. Padding, short cuts or shoddy construction are less likely to be tolerated. And city leaders might in turn overcome their aversion to the efficient pricing of public resources such as parking and busy roads. At the moment, investor appetites are keen and the supply of potential projects looks ample.
The project is causing some anxiety in Chicago, though. Although the new trust would leave all the resulting investment under public ownership, the city’s recent bitter experience with a bungled 75-year lease of its parking meters under a previous mayor has left residents fearful. And with reason.
For example, experience with public-private partnerships shows that cost-benefit estimates can sometimes prove wildly optimistic. When projects go bad—leaving half-built roads and schools—they become a public problem. Private investment might well end up being recouped in higher user fees.
Mr Emanuel is well aware that other cities are watching this experiment with interest. The mayor is a hugely ambitious man, who is undoubtedly keen to leave a lasting legacy, and who some believe may want to remain as mayor for a period of Daleyian proportions. He, of all people, will want to build something that other cities will want to copy, not avoid.