US Maintaining the Lead in High-Tech Innovation?

This post on HBR seems to indicate that the consensus view of the declining lead of the US to be on the cutting edge of high tech innovations and product development may be premature.  As the author outlines:

Between 1995 and 2005, the U.S. maintained about a 40% global share in knowledge-intensive services and about a 35% global share in high-tech industries, keeping the lead in four of them. Indeed, despite the high value of the dollar and the rapid growth of emerging markets between 1995 and 2005, the U.S. increased its global share in all but the aerospace industry. The U.S. share in communications equipment increased by more than 20 percentage points as Japan's share plummeted, and the U.S. doubled its share in computers and office equipment, although it was overtaken by China in 2003. These are the two sectors that encompass most of the products and companies that are the focus of the Pisano and Shih analysis.

The increase in China's share in computers and office machinery — from 2% in 1995 to 46% in 2005 — was remarkable, but it is not a sign that China has gained on the U.S. in innovative capacity in this sector or others. China's exports of high-tech products turn out to be not very high tech and not very Chinese: 80%-90% of China's high-tech exports come from firms that are partially or wholly foreign-owned — in many cases by American or Japanese companies — and 95% are processing exports, the high-tech components of which are produced elsewhere and imported into China. China accounts for about 35% of the value added in its exports — and considerably less in many of its high-tech exports sold under the brand names of U.S. high-tech companies like Apple, Microsoft, and HP.

While it may be the case that the US still leads in many of the innovations of high tech R&D and product development, I don't see how it can maintain this lead forever.  At some point these Asian countries will start to compete in not just low cost manufacturing and labor, but in high end R&D and cutting edge product development and even innovative new business processes and management techniques, another area where the US still seems to lead.

I think this is where the US will need to undergo an extensive process of "creative destruction" as advocated by Joseph Schumpeter.  It will not be pretty, nor will it be easy, but necessary if the US is to maintain the lead in high tech innovation.

The dumbing down effect of the internet

Ever since the rise of the internet from the early 90s as the most profound new medium for information exchange, much has been touted on the benefits for human beings, such as it being a more efficient means of communications, the democratization of ideas, having all the information at one's fingertips, etc... all true, yet like all things in life, you can have too much of a good thing. A couple of articles I just read seem to confirm this.

One was from the Economist, titled "Great minds think (too) much alike" which argues that the abundance and ease with which scientist can acquire scientific papers and journals, has in fact, narrowed or "dumbed down" to put it bluntly scientific research and knowledge:

Why this should be so remains unclear. It does not seem to have anything to do with economics. The same effect applied whether or not a journal had to be paid for. One explanation could be that indexing works by titles and authors alone, as happened with printed journals, forced readers to cast at least a cursory glance at work not immediately related to their own—or even that the mere act of flicking through a paper volume may have thrown up unexpected gems. This may have led people to make broader comparisons and to integrate more past results into their research.

It is not yet clear whether this change is for good or ill. Electronic searching means that no relevant paper is likely to go unread, but narrowing the definition of “relevance” risks reducing the cross-fertilisation of ideas that sometimes leads to big, unexpected advances. As a wag once put it, an expert is someone who knows more and more about less and less until, eventually, he knows everything about nothing. It would be ironic if that is the sort of expertise that the world wide web is creating.

I think the over specialization of knowledge in the scientific areas has been a trend and concern well before the advent of the internet phenomenon, and it goes beyond the sciences, as this was one of the main reasons I choose not to pursue a doctorate in Philosophy after graduating college, but the ubiquity and efficiency of data via the net, is accelerating this narrowing of knowledge.

Nicholas Carr, a well known business and technology writer infamous for proclaiming that the IT department was dead, yet again boldly states that it is due to the efficiencies of search engines like Google that is making us stupid:

For more than a decade now, I’ve been spending a lot of time online, searching and surfing and sometimes adding to the great databases of the Internet. The Web has been a godsend to me as a writer. Research that once required days in the stacks or periodical rooms of libraries can now be done in minutes. A few Google searches, some quick clicks on hyperlinks, and I’ve got the telltale fact or pithy quote I was after. Even when I’m not working, I’m as likely as not to be foraging in the Web’s info-thickets—reading and writing e-mails, scanning headlines and blog posts, watching videos and listening to podcasts, or just tripping from link to link to link. (Unlike footnotes, to which they’re sometimes likened, hyperlinks don’t merely point to related works; they propel you toward them.)

For me, as for others, the Net is becoming a universal medium, the conduit for most of the information that flows through my eyes and ears and into my mind. The advantages of having immediate access to such an incredibly rich store of information are many, and they’ve been widely described and duly applauded. “The perfect recall of silicon memory,” Wired’s Clive Thompson has written, “can be an enormous boon to thinking.” But that boon comes at a price. As the media theorist Marshall McLuhan pointed out in the 1960s, media are not just passive channels of information. They supply the stuff of thought, but they also shape the process of thought. And what the Net seems to be doing is chipping away my capacity for concentration and contemplation. My mind now expects to take in information the way the Net distributes it: in a swiftly moving stream of particles. Once I was a scuba diver in the sea of words. Now I zip along the surface like a guy on a Jet Ski.

Carr is arguing that not only has the internet caused a change in the way we access information, but that it is also effecting and shaping our thought process. There is some merit to this, as the scientific studies I have read and the one he cites in his article does show how new technological mediums change both at the individual psychological level as well as culturally the way we think and the influences thereof. On an anecdotal note, I do see the younger generation being extremely distracted with ever shortening attention spans and what I like to refer to as the "Twitter Crowd". It has gotten to the point where companies now are hiring consultants to learn how to manage these Millennials.

Nevertheless, with every new technological breakthrough, there are always those who want to warn us of the impending doom to humankind such technologies create, and even Carr acknowledges that "those who dismiss critics of the Internet as Luddites or nostalgists will be proved correct", but I do think it is imperative to be mindful of the conclusion of his article, "as we come to rely on computers to mediate our understanding of the world, it is our own intelligence that flattens into artificial intelligence".

That's basically the key dealing with all this new deluge of information that we are now bombarded with, is that you need to put more of an effort to manage this information, or get managed by it!

The IT department is dead?

In an article just published on Network World, it claims that business writer Nicholas Carr boldly states that "the IT department is dead, and it is a shift to utility computing that will kill this corporate career path". Such is the thesis of his newly published book The Big Switch: Rewiring the World, from Edison to Google.

This is not a surprise since in 2003, he published a similar sentiment in a HBS article titled "Does IT Matter" which got published in a book of the same title. The article asserted that IT investments didn't provide companies with strategic advantages because when one company adopted a new technology, its competitors did the same, thus eliminating any competitive advantage originally claimed. This in turn is what leads to the commoditization of IT software and hardware. In addition, the skill sets which were originally highly sought after to set up an IT infrastructure become commodities in turn, since the skill's value diminish in parallel with growing ubiquity and ease with which such high tech products are purchased and implemented.

Seems Carr still holds the above view and further predicts that such services will be transferred over to a IT "utility" type company, much like electric utility companies replaced company-run power plants in the early 1900s. As Carr explains:

Factory owners originally operated their own power plants. But as electric utilities became more reliable and offered better economies of scale, companies stopped running their own electric generators and instead outsourced that critical function to electric utilities.

Carr predicts that the same shift will happen with utility computing. He admits that utility computing companies need to make improvements in security, reliability and efficiency. But he argues that the Internet, combined with computer hardware and software that has become commoditized, will enable the utility computing model to replace today’s client/server model...

Carr embraces Google as the leader in utility computing. He says Google runs the largest and most sophisticated data centers on the planet, and is using them to provide services such as Google Apps that compete directly with traditional client/server software from vendors such as Microsoft.

"If companies can rely on central stations like Google's to fulfill all or most of their computing requirements, they'll be able to slash the money they spend on their own hardware and software — and all the dollars saved are ones that would have gone into the coffers of Microsoft and the other tech giants," Carr says.

While I do agree that IT is becoming more of a commodity, I think it is a bit of a jump to assume that this will render all IT type jobs obsolete. I definitely think jobs tied to a specific technology will become obsolete, but anyone working in IT knows that or should know it. I think the real trend, and one which I'm noticing in my day to day work as well as what I observe going on in the industry, is that IT will be though of a just another necessary operational function and be more aligned with business functions and needs, and less as a separate division in which you need highly paid and skilled technicians to run it.

Obviously Carr is resorting to hyperbole to sell his book, but I read his first book and found it thought provoking and I expect the same from this more recently published work, and if it gets me to think more critically and strategically at my job function as an IT project manager, then I think it will be well worth the effort.