Tag: government

Proudly designed in Gyeonggi

Asian manufacturers are moving up the value chain. Could Korea, China and Taiwan start competing with Apple?

“Designed by Apple in California ” is the boast on the box of every new iPad or Macbook. That the slogan says ‘designed’ rather than ‘made’ says everything about how manufacturing has fled the United States.

Last year the New York Times looked at Apple’s overseas manufacturing operations, pointing out that even if Apple wanted to make their product in the the US many of the necessary skills and infrastructure have been lost.

Now the US is facing the problem that Asian countries are looking at moving up the intellectual property food chain and doing their own designs.

In some ways this is expected as it’s exactly what Japan did with both the consumer electronics and car industries during the 1960s and 70s.

The big difference is that Japanese manufacturers travelled to the US and Europe to study the design and manufacturing methods of the world’s leading companies. In the 1990s and 2000s, the world’s leading companies gave their future competitors the skills through outsourcing and offshoring.

In the next decade we’ll see the latest consumer products coming with labels reading “Designed by Lenovo in Fujian” or “Developed by Samsung in Gyeonggi”.

For western countries, the question is what do we want to be proudly be putting our names to?

Image from Kristajo via SXC.HU

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Blind faith in the algorithm

Putting too much faith in computer programs may cause problems for the unwary.

It’s fairly safe to say Apple’s ditching of Google Maps for their own navigation system has proved not to be company’s smartest move.

The humiliation of Apple was complete when the Victoria Police issued a warning against using the iPhone map application after people became lost in the desert when following faulty directions to the town of Mildura.

Mapping is a complex task and it’s not surpising these mistakes happen, particular given the dynamic nature of road conditions and closures. It’s why GPS and mapping systems incorporate millions of hours of input into the databases underlying these services.

Glitches with GPS navigations and mapping applications aren’t new. Some of the most notorious glitches have been in the UK where huge trucks have been directed down small country lanes only to find themselves stuck in medieval villages far from their intended location.

While those mishaps make for good reading, there are real risks in these misdirections. One of the best publicised tragedies of mis-reading maps was the death of James Kim in 2007.

Kim, a well known US tech journalist, was driving with his family from Portland, Oregan to a hotel on the Pacific Coast in November 2006 when they tried to take a short cut across the mountains.

After several hours driving the family became lost and stuck in snowdrifts and James died while hiking out to find help. His wife and two children were rescued after a week in the wilderness.

Remarkably, despite warnings of the risks, people still get stuck on that road. The local newspaper describes it the annual ritual as find a tourist in the snow season.

Partly this irresponsibility is due to our modern inability to assess risk, but a more deeper problem is blind faith in technology and the algorithms that decide was is good and bad.

A blind faith in algorithms is a risk to businesses as well – Facebook shuts down accounts that might be showing nipples, Google locks people out of their Places accounts while PayPal freeze tens of thousands of dollars of merchants’ funds. All of these because their computers say there is a problem.

Far more sinister is the use of computer algorithms to determine who is a potential terrorist, as many people who’ve inadvertently found themselves on the US government’s No Fly List have discovered.

As massive volumes of information is being gathered on individuals and businesses it’s tempting for all of us to rely on computer programs to tell us what is relevant and to join the dots between various data points.

While the computers often right, it is sometimes wrong as well and that’s why proper supervision and understanding of what the system is telling people is essential.

If we blindly accept what the computer tells us, we risk being stuck in our own deserts or a snowdrift as a result.

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Did online democracy ever exist?

The idea of democracy in an online world dominated by private interests is a misnomer.

“Democracy is dead” proclaim online pundits as Facebook closes down their corporate governance feedback pages.

The question though is whether democracy really exists online; the internet is largely a privately run operation which makes the hysteria about the International Telecommunication Union’s attempts to impose standards on the web all the so more fascinating.

As a consequence of almost every internet service being run by private organisations, rights and concepts like “democracy” are pretty well irrelevant and have been since the first connection to ARPANET.

When we use services like Facebook, or even our internet provider’s email account, we are only being allowed to do so within the companies’ interpretation of their terms and conditions.

Often those interpretations are wrong or bizarre as we see with Facebook’s War on Nipples and often the results of misinterpretation are costly for businesses.

But we have little recourse as these sites are private property and the owners can do pretty well what they like within the law.

Just a like a shopping mall, if the managements of Amazon, Google or Facebook want you to leave their service then you have no choice but to do so.

We can squeal about rights online, but in reality we have few.

That’s something we should keep in mind when investing our time or business capital into any particular platform.

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How the film industry cons governments

Do government incentives really build a sustainable movie industry?

“I would never make a movie where I didn’t get an incentive and I don’t ever intend to” states Michael Benaroya, producer of the movie Margin Call, in a New York Times story on movie studio subsidies.

While we focus on the cost of subsidies to motor manufacturing, one sector that beats all others for playing governments for suckers is the global film industry.

“Incentives” are a huge factor in determining where studios will film their latest blockbuster, Australia’s learning this the hard way as rent seekers looking for fat subsidies parade Hollywood stars in an effort to convince publicity hungry ministers that giving fat payments to the major production houses is good for jobs.

The problem with this is that these susbidies aren’t that great for employment – Accompanying the New York Times’ video is a story on how Michigan’s dream of building a film industry has foundered.

“Film is one of the few industries that’s really well subsidised and that’s a really attractive thing” Michael Benaroya says in the video.

Before Michael even made the movie, he sold the rights to the New York production subsidies to investors. Who says financial engineering is the purview of Wall Street?

The question for governments, taxpayers and those who want to build a sustainable movie industry in their city, state or country is do you want to attract “entrepreneurs” like Michael Benaroya who are shopping around the world for the best deal.

New York might be the flavour today, but tomorrow it might be Sydney, Toronto or Prague. If the incentives aren’t fat enough then the movie productions may not come back for decades.

In the meantime the crews, production assistants and catering companies who make up most of the employment on a major production move onto other jobs so the skills and industry infrastructure is lost.

The biggest challenge is for governments, it’s estimated that New York state gives away over $400 million in subsidies and it’s difficult to see how that sort of expenditure can be justified as politicians face cuts to basic spending in today’s austere times.

For the taxpayers, we need to be demanding fair value and real long term plans behind the subsidies doled out to the film, motor manufacturing and other industries.

During the good times it was easy for opportunist politicians to dole out money to rent seekers for a media opportunity or to boost votes in a key electorate, but today that spending has to be strategic with real value and outcomes.

As Michael Benroya shows, when an entire industry is based around government subsidies and incentives the leaders are those who know how to manage the bureaucracy and fill in the forms properly. Is that what we want our industries to become?

If the answer is ‘yes’, then the next question is ‘can we afford it?’

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Disrupting the disrupters

Silicon Valley’s investment models are changing as attention moves from the consumer to the enterprise.

Two days ago, iconic venture capital investor Fred Wilson, wrote about the changing nature of the tech industry’s VC investments.

Fred puts the changes down to three factors; maturing markets where big players increasingly dominate, the move to mobile which Cristina Cordova examines in more detail and the shift in focus from the consumer market to the enterprise sector.

The last factor bears more examination as consumer and enterprise are very different and there’s no guarantee that businesses built around thousands of people downloading apps or accessing websites can pivot into selling into corporations and government agencies.

Probably the biggest problem is the consumer or small business freemium model doesn’t cut it in the enterprises who are prepared to pay big sums for highly reliable and secure services.

Similarly the enterprise model of fat sales commissions paid for by big implementation costs and expensive support contracts doesn’t quite fly either for these start up business. There’s also a good argument that high margin enterprise model is doomed anyway as cloud services displace costly in-house installations.

In the transition from consumer to enterprise is difficult and most companies have struggled to make the jump, even Google Docs has been a hard sell into the corporate sector.

At the enterprise end, cloud services are cutting margins as IBM and Oracle are finding. Both companies are moving across to cloud products and now a lot of salespeople and consultants in those organisations are looking at a substantial drop in their standards of living.

More importantly for the startup and VC communities, the “greater fool” model doesn’t work in the enterprise space. Hyping a business which has barely made a cent in revenue but does have a million users is very different to building a stable corporate platform.

It may well be the move to the enterprise by Silicon Valley is because the consumer model has run out of “greater fools” who’ll buy overhyped photo sharing apps or social media platforms of dubious value.

This change in investment behaviour also has lessons for governments trying to copy Silicon Valley. The puck moves fast in the investment community while governments, by definition, are slow.

By the time governments have setup their programs, the markets have moved on and many of the hot technologies of two years prior are now old hat. This is exactly what we’re seeing in the apps world.

We often hear about technology causing disruption, often though we forget that those disruptive technologies can be ephemeral as they are disrupted themselves.

As these industries evolve, we’ll see how well the disrupters deal with being disrupted.

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Tracks in the ether

Smartphones, the web and tracking technologies are giving governments and businesses more power than ever.

Bureaucrats dream of tracking every person or asset under their purview and the rise of technologies like smartphones,  Global Positioning Systems (GPS) and Radio Frequency IDentity (RFID) chips are giving them more power than ever.

Two stories in the last week illustrated how these technologies are being used by authorities to monitor people; a school district in the United States is fighting a student who refuses to wear an RFID enabled identity card and Saudi immigration authorities are now sending text messages to guardians of travellers, mainly women, leaving the country.

In Saudi Arabia, the law prohibits minors and women from leaving the country without the permission of their adult male guardians. As the Riyadh Bureau website explains, to streamline the permission process Saudi authorities enabled online pre-registration for travellers so now male guardians can grant assent through a website rather than dealing with the immigration department’s paperwork every time their spouse or children wants to travel.

When the spouse or child passes through immigration, the guardian receives an SMS message saying their ward is about to leave the country. One assumes the male can withdraw that approval on receipt of the text.

The Saudi application is an interesting use of the web and smartphones to deliver government services and probably not what Western e-gov advocates are thinking of when they agitate for agencies to move more functions online.

More ominous is the story from the US where Wired Magazine reports Andrea Hernandez, a Texan student, is fighting her local school over the use of RFID enabled identity cards that track pupils’ attendance.

John Jay High School’s use of RFID tags is a classic case of bureaucrat convenience as electronic cards are far easier to manage and monitor than roll calls or sign-ins.

Incidentally John Jay High School has over 200 CCTV cameras monitoring students’ movements, as district spokesman Pascual Gonzalez says, “the kids are used to being monitored.”

The problem is that RFID raises a range of privacy and security issues which the bureaucrats either haven’t thought through or have decided don’t apply to their department.

Notable among those issues is that “has a bar code associated with a student’s Social Security number”. It never ceases to amaze just how, despite decades of evidence, US agencies and businesses keep using an identifier that has proved totally unsuited for the purposes it was developed for.

Probably the most worrying point from the Texan story is how school officials tried to suppress the story, offering Ms Hernandez’s father a compromise on the condition he “agree to stop criticizing the program and publicly support it.”

That urge to control criticism and dissent is probably the thing all of us should worry about when governments and businesses have the ability to track our movements.

In this respects, the Texas education officials are even more oppressive than Saudi anti-women laws. Something we should consider as more of our behaviour is tracked.

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Incurious George and the cult of managerialism

The BBC’s scandals illustrate how management layers diffuse responsibility in modern organisations

“Do you not read papers?” Thundered the BBC’s John Humphrys to the corporation’s Director General during an interview over the broadcaster’s latest scandal.

That exchange was one of the final straws for the hapless George Entwhistle’s 54 day leadership of the British Broadcasting Corporation where the Jimmy Savile scandal had seen him labelled as ‘Incurious George’ for his failure to ask basic questions of his subordinates.

Humphry’s emphasised this when discussing the Newsnight program’s advance notice of the allegations they were going make;

You have a staff, but you have an enormous staff of people who are reporting into you on all sorts of things – they didn’t see this tweet that was going to set the world on fire?

A lack of staff certainly isn’t the BBC’s problem, the organisation’s chairman Chris Patten quipped after Entwhistle’s resignation that the broadcaster has more managers than the Chinese Communist Party.

George Entwhistle’s failure to ask his legion of managers and their failure to keep the boss informed is symptomatic of modern management where layers of bureaucracy are used to diffuse responsibility.

In every corporate scandal over the last two decades we find the people who were paid well to hold ‘responsible’ positions claimed they weren’t told about the nefarious deeds or negligence of their underlings.

Shareholders suffer massive losses, taxpayers bail out floundering businesses and yet senior executives and board members happily waddle along blissfully content as long as the money keeps rolling in.

If it were just private enterprise affected by this managerialism then it could be argued that the free market will fix the problem. Unfortunately the public sector is equally affected.

Managerialism infects the public service as we see with the BBC and it’s political masters  and the results are hospital patients die, wards of the state abused, known swindlers rob old ladies and agencies continually fail to deliver the services they are charged to deliver.

Again the layers of management diffuse responsibility; the Minister, the Director-General and the ranks of Directors with claims to the executive toilet suite’s keys are insulated from the inconvenience of actually being responsible for doing the job they are paid to do.

Managerialism and incuriousity are fine bedfellows, in many ways Incurious George Entwhistle is the management icon of our times.

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