Posts Tagged ‘Technology’

Jobs’ Passing Is a ‘Cultural Milestone’

Thursday, October 6th, 2011

John Jordan, clinical associate professor of supply chain and information systems, reflects on the accomplishments of Steve Jobs:

The passing of Steve Jobs is a cultural milestone; his greatness is unquestioned. He was responsible for five seismic changes in the computing landscape: the original Macintosh, Pixar studios (home of “Toy Story”), the iPod, the iPhone, and the iPad. For all the justified talk of Jobs being a visionary, however, his name is on 313 different Apple patents, demonstrating an attention to detail rare in a chief executive.

Why are people bringing personal notes and tributes to Apple stores?  With Steve Wozniak, whom he treated shabbily, Jobs helped invent the personal computer. But it is only in the past decade that the computer has become truly personal, part of our daily life: iPods are in our ears, iPhones in our pockets, and iPads get read in bed. This intimacy, the quality of computing that stops being called computing, results from Jobs’ attention to design. He studied calligraphy as a teenager, and his love of typography helped defined the graphical user interface. The iPod has no screws or fasteners visible, and Apple’s signature white plastic cases are actually clear, with white backing. Even something as non-essential as the magnetic case for the iPad 2 is incredibly clever. The net result of such fastidiousness is tools that become fun to use, not alien forces to be wrestled into submission.

But such triumphs were not inevitable. Perhaps the most salient point of Jobs’ career is that his greatest moments emerged from personal failure. After the original Mac failed to sell in large numbers, Jobs was forced out of the company he co-founded. Apple drifted for more than a decade, and when he returned, Jobs’ first move was to tighten relations with Microsoft, disappointing the us-against-them crowd and, incidentally, obtaining a desperately needed cash infusion. The turnaround that followed was among the greatest success stories in the history of American business.

In part, technology had advanced to the point where Jobs’ vision could be executed: processors got fast and cool enough for slim designs. Flat-panel displays replaced bulky CRT monitors. Miniaturization of components, increased storage density, and ubiquitous wi-fi made the hand-held computer known as the iPhone possible. But Apple was never only about the technology, it was about human imagination and aspiration. When Jobs talked about “insanely great,” he referred both to the hardware and to the people at the company responsible for it.  He will be remembered as an icon alongside Henry Ford, a man largely responsible for the dawn of an era.

Tags: Jordan, Management, Supply Chain, Technology
Posted in News | 61 Comments

Technology and Unemployment

Wednesday, August 24th, 2011

Speaking at a town hall meeting last week in Illinois, President Obama said that one of the challenges of creating jobs in our economy is that businesses have used technology to become incredibly efficient, thus reducing their need for employees.

“When was the last time somebody went to a bank teller instead of using the ATM, or used a travel agent instead of just going online?” the president asked. “A lot of jobs that used to be out there requiring people now have become automated.”

“Have they really?” asks Smeal’s John Jordan in the latest edition of his e-newsletter and blog, Early Indications:

The impact on the unemployment rate of information technology and its concomitant automation is not at all clear. The effect is highly variable across different countries, for example. Looking domestically, travel agents were never a major job category: Even if such jobs were automated away as the number of agencies dropped by about two-thirds in the decade-plus after 1998, such numbers pale alongside construction, manufacturing, and, I would wager, computer programmers whose positions were offshored.

The unfortunate thing in the entire discussion, apart from people without jobs obviously, is the lack of political and popular understanding of both the sources of the unemployment and the necessary solutions. Merely saying “education” or “job retraining” defers rather than settles the debate about what actually is to be done in the face of the structural transformation we are living through. On that aspect, the president is assuredly correct: He has the terminology correct, but structural changes need to be addressed with fundamental rethinking of rules and behaviors rather than with sound bites and band-aids.

Jordan offers more detailed commentary and analysis in the August edition of Early Indications.

Tags: Economic Crisis, Economy, Hospitality and Travel, Jordan, Technology, Unemployment
Posted in News | 24 Comments

Groupon IPO

Wednesday, July 13th, 2011

“Facebook, Groupon and Zynga are creating an investor frenzy around high-growth Internet companies while commanding sky-rocketing valuations. But are the valuations for these pre-IPO companies justified?” asks TheStreet.com. At least in the case of Groupon, Smeal’s Ed Ketz says, “No.”

On their blog, Grumpy Old Accountants, Ketz and Anthony H. Catanach Jr., associate professor of business at Villanova University, take a look Groupon’s S-1 filing with the Securities and Exchange Commission and conclude that they would rather buy lottery tickets than participate in its IPO:

Let’s begin with the income statement.  Sales exploded from $30 (all account balances are in millions of dollars) in 2009 to $713 in 2010, an almost unheard of 23-fold growth.  Unfortunately, expenses had an even greater astronomical growth, going from $37 in 2009 to $1,170 in 2010 for net losses of $(7) and $(456), respectively.  The biggest expense accretion resides in acquisition-related expenses of $203; however, even if we remove this item from consideration, expenses are still $967 and they still swamp revenues.  Persistent earnings are clearly negative and serve as one huge red flag.

The balance sheet also displays repugnance.  Current assets are $174 while current liabilities equal $370.  Any business sophomore knows that isn’t good.  Total assets equal $382 and total liabilities $372, so total stockholders’ equity is a mere $10.  Having only 3% equity isn’t good for banks, much less anybody else; the financial leverage risk is huge.

There’s more, too. Read on on Grumpy Old Accountants.

Tags: Accounting, IPO market, Ketz, Technology
Posted in News | 21 Comments

A Patent Battle in a Broader Conflict

Wednesday, April 27th, 2011

Smeal’s Daniel Cahoy, a patent lawyer and associate professor of business law, weighs in on the Microsoft v. i4i Supreme Court case and its role in broader patent law developments:

Last week, the Supreme Court heard oral arguments in the case of Microsoft v. i4i.  The Court’s eventual decision has the potential to substantially alter the patent property right by relaxing the presumption of validity and making it easier for defendants to mount challenges in court.  Although the outcome of most future litigations may not be significantly impacted – the presumption only plays a role in close cases – the dispute is an interesting battle in a broader war.  The rhetoric between those satisfied with the status quo in patent law and those who believe the system is fundamentally broken has been heating up for some time, and the i4i case is but one part of the debate.  As patent rights play an ever more important role in fields like communications, health care and sustainability, it’s important to consider how patent reform efforts can impact the future value of this critical asset.

The i4i case involves a patent on a software editor for XML, which is a computer language.  According to i4i, Microsoft’s Word program contained an XML editor that infringed i4i’s patent.  In defense, Microsoft argued that i4i’s patent was invalid due to an early sale by i4i that placed the invention into the public domain.  However, Microsoft’s evidence of the early sale depended on witness testimony that was not originally available to the patent office, and was rebutted by i4i’s witnesses.  In the end, the jury found the patent not invalid and held Microsoft liable for $240 million in damages.

Despite the somewhat mundane facts of the case, the issue on appeal to the Supreme Court is central to patent law.  It concerns the statutory presumption that an issued patent is valid.  The courts have traditionally interpreted the presumption to require “clear and convincing” evidence to overturn a patent, which is an advantage for the patentee.  Such an evidentiary burden is higher than the standard “preponderance of the evidence” that exists in most civil cases.  Microsoft argues that this evidentiary burden is too high, giving too much credit to an overworked patent office and permitting the enforcement of invalid patents.  It is particularly inappropriate when the Patent Office had not considered the evidence in question during the original examination.  According to Microsoft, if the jury had been able to equally weigh the witness testimony on both sides, it might have found the patent invalid.

From i4i’s point of view, the expert examination rendered by the Patent Office — a process that can take years — is due substantial weight.  The resulting patent deserves more than the toss-up evidentiary contest of a typical civil case.  In addition, it can be argued that the greater certainty that comes with a higher evidentiary burden is an important aspect of the value of patents.  Easier challenges may result in an increase in infringement and reluctance on the part of prospective users to license. 

Rather than dividing politically, the battle lines in the i4i case are drawn roughly along industry boundaries.  Many in the high-tech, consumer electronics sector, including companies like Apple, Google and Dell, have sided with Microsoft.  Companies in the pharmaceutical and biotechnology sectors, like Bayer and Genentech, as well as intellectual property owner organizations, support i4i.  To be sure, there are many crossovers and the industry delineation is not perfect (for example, IBM supports i4i’s position).  But one has the sense of a technology bias in the various positions on the case.

Not surprisingly, one can see many of the same alliances in other patent reform contexts.  In general, firms in crowded, fast-moving technology fields are more likely to see patents as a hindrance to innovation and support stronger limits.  Firms that depend on patents for long-term profits and have a more silo-like innovation environments tend to prefer stronger rights, or at least favor the status quo.  As it stands now, it seems that there is no obvious direction for comprehensive patent reform that is capable of garnering across-the-board support.  For that reason, Congress has struggled to make changes in recent years.  Current pending legislation (the America Invents Act) makes more modest revisions than some would prefer, yet it still faces opposition. 

Change does happen, though.  Lately, the courts have taken the lead, making piecemeal revision in individual cases that slowly reforms the law.  Is this enough?  Some have argued that a more comprehensive approach is necessary to provide America with a 21^st century innovation environment.  But because satisfying all of the interested parties will continue to pose a political challenge, cases like i4i play an important role.

Tags: Business Law, Cahoy, Technology
Posted in News | 4 Comments

Resizing Government

Monday, February 7th, 2011

“Governors around the U.S. are proposing to balance their states’ budgets with a long list of cuts and almost no new taxes, reflecting a goal by politicians from both parties to erase deficits chiefly by shrinking government,” The Wall Street Journal reports. “Some state officials and lawmakers say they have a chance to reshape government in ways that might not have been politically palatable in years past.”

In his newsletter Early Indications, Smeal’s John Jordan writes: “The process of resizing government … needs to begin with a look at what governments can and need to do, as well as how they do it. Furthermore, there are tasks that at one time were essential, but technological obsolescence is slow to alter governments.”

Jordan proposes that there are at least five questions that need to be answered when talking about resizing government:

1. What must government do, and how can other entities help deliver necessary services?
2. What can government stop doing entirely?
3. What is the right level of organization?
4. How can interested parties self-organize?
5. How can government do what it needs to do, more efficiently?

Elaborating on the fifth question, Jordan writes that, when it comes to IT, government could take a few cues from the private sector:

IT in government remains a sore subject. President Obama’s chief information officer, Vivek Kundra, recently put forth a 25-step plan to reform federal IT management. Many of the items are broad and seemingly self-evident to anyone familiar with industry (“consolidate data centers” and “develop a strategy for shared services” for instance). The fact is, however, that industry does not follow federal acquisition or implementation practices; getting federal IT to perform at a reasonable fraction of an Amazon or FedEx would be a massive achievement. Many of the most notable IT project failures of the past decade are government implementations: systems development disasters at the U.S. Census and the FBI are prime examples of the performance gap.

Compared to customer service in travel, banking, shopping, or information businesses (iTunes, anyone?), finding even basic information on most government websites can be painful. Transparency can be difficult to track down. Control of bills passing through legislation is a key perquisite of power, and holding up the process with committee hearings that happen very slowly and/or erratically is common, so clear, open calendars are not always the rule. Like legislatures, regulatory bodies can be opaque, in that budget and headcount information is typically difficult to obtain, unlike the information readily available in a private company’s annual report.

If information can be hard to find, the state of on-line transactions is even more dismal: compare getting a fishing license or renewing other permits to checking in for an airplane flight. While efficient government looks much better to citizens on the outside than to gainfully employed government workers on the inside of slow-moving bureaucracies with no incentive to improve customer service, perhaps the current crisis can provide the impetus for real change to commence. In a sector that lags private industry by many performance metrics, a combination of new tools and more focused motivation has the promise to improve service, cut costs, increase accountability, and enhance security.

Tags: Economy, Jordan, Politics, Technology
Posted in News | 10 Comments

Analytics Boom

Wednesday, December 8th, 2010

Writing on Forbes.com, Smeal’s John Jordan looks at the growing use of analytics to make business decisions, arguing that “numbers-driven decisions are no longer the exclusive province of people with hard-core quantitative skills.” Loosely defining analytics as using “statistical and other methods of processing to tease out business insights and decision cues from masses of data,” Jordan indentifies three examples of the growing use of data-based decision making:

- The “flash crash” of May 2010 focused attention on the many forms and roles of algorithmic trading of equities. While firm numbers on the practice are difficult to find, it is telling that the regulated New York Stock Exchange has fallen from executing 80 percent of trades in its listed stocks to only 26 percent in 2010, according to Bloomberg. The majority occur in other trading venues, many of them essentially “lights-out” data centers; high-frequency trading firms, employing a tiny percentage of the people associated with the stock markets, generate 60 percent of daily U.S. trading volume of roughly 10 billion shares.

- In part because of the broad influence of Michael Lewis’ bestselling book Moneyball, quantitative analysis has moved from its formerly geeky niche at the periphery to become a central facet of many sports. MIT holds an annual conference on sports analytics that draws both sell-out crowds and A-list speakers. Statistics-driven fantasy sports continue to rise in popularity all over the world as soccer, cricket and rugby join the more familiar U.S. staples of football and baseball.

- Social network analysis, a lightly practiced subspecialty of sociology only two decades ago, has surged in popularity within the intelligence, marketing and technology industries. Physics, biology, economics and other disciplines all are contributing to the rapid growth of knowledge in this domain. Facebook, al-Qaida and countless startups all require new ways of understanding cellphone, GPS and friend/kin-related traffic.

 Also on Forbes.com, Jordan lists nine reasons for “The Data Analytics Boom.”

Tags: Jordan, Technology
Posted in News | 11 Comments

An iPad Review

Tuesday, August 10th, 2010

In the latest edition of his e-newsletter Early Indications, Smeal’s John Jordan offers a review of Apple’s iPad, calling it “a milestone that redefines how people and technology interrelate.” In the excerpt below, Jordan offers his opinion on the tablet’s e-reader capabilities (and limitations):

The iPad rapidly changed some of my long-standing habits. Reading, however, is not one of them. I have yet to get on board the e-reader bandwagon, and have left several texts I should read for work untouched: I literally forget they’re loaded and waiting for me. In part this is because I read scholarly books idiosyncratically, never starting at page 1 and proceeding to 347. Rather, I’ll start by looking at the plates if the book has them, checking out the pictures bound somewhere randomly in the middle. From there I might look through the endnotes, or the jacket blurbs. I’ll often skip chapter 1, at least initially, preferring instead to start with what often turns out to be the first body chapter with real evidence and real argument rather than introductory matter which some people find very hard to write. The point is that e-readers do not support non-fiction reading as well as they do a good mystery, where there’s only one way through the story. Pagination also presents a real issue when you need to footnote a source.

To stay with the question of reading, what was widely called “the Jesus tablet” in the publishing industry can not yet serve as a replacement for a physical magazine—particularly at the prices being suggested: $4.99 a week of Time or Sports Illustrated is not going to fly, I don’t believe. Merely exporting static, dated dead-tree content to a new medium (which happens to be dynamic, real-time, and capable of multimedia) follows a familiar trap. The Wright brothers did not succeed by mimicking a bird. Printed books did not find a market mass-producing hand-lettered scrolls. Television quickly stopped presenting radio shows with visible people. Businesses are continuing to learn that the Web is not “television except different.”

You can read his complete review here.

Tags: Jordan, Technology
Posted in News | 16 Comments

Google’s China Ultimatum Risky

Thursday, January 21st, 2010

Smeal’s Rajeev Sooreea says that Google’s threat to leave China is a risky move that could damage its ability to succeed in China if it ultimately decides to continue operating there:

Google’s threat to exit China is not only an economic decision but also a key strategic one.

J.P. Morgan has estimated that Google could potentially lose $600 million in revenue if it withdraws from the China market. And such market share could be a boon for companies like Microsoft, which is there to stay, and Baidu, which already has 63.9 percent of the market, compared to Google’s 31.3 percent.

Whether Google leaves or stays essentially comes down to how it prioritizes its goals: market presence versus market growth. If Google leaves, it could still have an indirect market presence by transferring its China businesses to local players in exchange for equity stakes. But then it would severely compromise its market growth. Microsoft has had bumpy times with the Chinese authorities but its focus is on growth. For Microsoft, the China market is too big to walk away from. Over the years it has learned its lessons and Google will have its own if it stays.

It is important for foreign firms to realize two things: First, successful longstanding multinational companies in China are those that contribute to the welfare of the economy. Second, the business-government relationship and culture in China are far more complex than what one could anticipate. One of the premises on which Google is founded is freedom of expression. But freedom of expression is molded to a large extent by culture, and what may be valued and promoted in the United States may not be admissible in some other cultures, including China. Besides, in some cultures, freedom of expression may not be a social or political priority.

Google’s threats to exit China could be viewed in several ways. It could be real or strategic. If it is real and Google exits, it will lose a big market (but it may be honorable in the sense that Google was already struggling against competitor Baidu and it has upheld its no censorship philosophy). If the threat is fictitious and used to strategically force information out of the government, then it may land itself in a worst-case scenario, making its future growth in China more politically difficult. This could well be the case, too, even if the threat is real and Google stays in China.

For the company’s sustainability in China, threats seem to be damaging because the stick component of the carrot and stick is seldom welcome there. Again, the parallel is with Microsoft which used to send threatening letters to the Chinese authorities in its early years but then it had to change its strategy and adopt a friendlier approach. Today it is more successful than ever before.

On the other hand, China has to proactively do its fair share of the trade. Google simply withdrawing from China will not make the attackers go away. All across Asia, China is renowned for giving red-carpet treatment to foreign multinationals. If it wants to maintain its leadership, it should realize that the playing field is flattening out, and reinforcing its intellectual property laws would be a key factor for its own long-term success. Hacking is a deliberate violation of privacy and this is an area where the Chinese authorities need to do something more concrete. Only collaboration between Google and the Chinese government could be welfare-enhancing for both.

Tags: China, Globalization, International Relations, Sooreea, Technology
Posted in News | 27 Comments

Non-Latin Web Domains

Friday, October 30th, 2009

“By the middle of next year, Internet surfers will be allowed to use Web addresses written completely in Chinese, Arabic, Korean, and other languages using non-Latin alphabets,” The New York Times reports. “In an action billed as one of the biggest changes in the Web’s history, the board of the Internet Corporation for Assigned Names and Numbers—or Icann—voted Friday during its annual meeting, held in Seoul, to allow such scripts in Internet addresses.”

Smeal’s John Jordan weighs in on the business implications and historical significance of this decision:

The expansion of the Internet domain name system from 37 Latin characters (26 letters, 10 digits, and a hyphen) to include character-based languages is a landmark event for the globalization of communications. More than 100,000 characters will eventually be added, so at one level the decision by Icann to accept the technical challenge (particularly, but not exclusively, at the level of the root name servers) is noteworthy. From a business standpoint, the decision marks a recognition of the growing importance of such character-based languages as Arabic, Chinese, Japanese, and Korean. Billions more people will be able to connect to the Internet using their native language and keyboards.

The decision raises a variety of fascinating questions. Given the rapid adoption of mobile Internet in the developing world, how will the availability of domain names in numerous character sets affect the design of smartphones for these markets? Given that Chinese relies on about 6,000 characters, for example, a RIM Blackberry-style keyboard would be difficult or impossible to implement.  On the marketing front, how will global brands adapt to the wider availability of non-Latin representation online? How will native-language Internet naming affect literacy efforts and measurements? How will a vastly multiplied character set affect security efforts?

At another level, the action is a splendid piece of historical timing: The first Internet message was sent 40 years ago this week, and the Netscape Navigator browser launched 15 years ago this month.  Predicting where the international, mobile Internet will be in even five years is impossible; coping with change of this magnitude at this speed is unprecedented in human experience.

Tags: Globalization, Jordan, Technology
Posted in News | 3 Comments

Googling Employee Retention

Tuesday, May 26th, 2009

“Concerned a brain drain could hurt its long-term ability to compete, Google Inc. is tackling the problem with its typical tool: an algorithm,” according to The Wall Street Journal. “The Internet search giant recently began crunching data from employee reviews and promotion and pay histories in a mathematical formula Google says can identify which of its 20,000 employees are most likely to quit.”

According to Smeal’s Maria Taylor, director for learning solutions for Penn State Executive Programs and co-author of Human Resource Transformation: Demonstrating Strategic Leadership in the Face of Future Trends, “Google may revolutionize talent management the same way it revolutionized how we find and use information.”

More from Taylor:

Google’s recent announcement that it is testing a mathematical formula to predict employee departures is a marvelous example of an organization drawing on its core competency to solve new problems.  In this case, Google is synthesizing seemingly disparate sources of data into relevant information to help to solve its talent retention challenges.

This mathematical approach is clearly consistent with Google’s data driven culture.  The question is: How well will Google combine this tool to build a viable system of talent management that is consistent with its culture? 

Google’s identity is built upon user and employee focus.  A visit to the Google Web site shows the emphasis on innovation, individual contribution, and the team in links such as the “Ten Things Google has found to be true” and “The Google Culture.”  The new tool will be successful if it facilitates the organization to keep true to this culture and uses the information provided to raise the engagement levels of those who are identified as at risk.  High tech plus high touch equals high impact.

Organizations that are successful in developing and retaining great talent share several characteristics: genuine focus on the mission and success of the organization as a whole, unique opportunities for employees to feel like they can make a difference, the belief that one’s contributions will be appreciated and recognized, and real involvement of leadership at all levels in developing talent.  Talent and leadership development programs are successful when executed as an integral part of the greater whole of organizational growth and success. 

To the degree that organizations can identify the important factors in retention and success, mathematical modeling and data-driven decision tools may become important components.  However, their true success will be determined by implementing an integrated program that considers organizational as well as individual success and growth.

Tags: Human Resources, Management, Taylor, Technology
Posted in News | 34 Comments