Creative Class

It’s been hard to justify high-speed rail (HSR) projects in terms of conventional cost-benefit analysis. But, it may be time to rethink – and broaden  - the way we think of the benefits of HSR. HSR’s benefits are usually thought of in terms of lowering transport costs by reducing problems like gridlock, pollution, and travel time. But the real benefit of HSR may turn on its ability to expand economic growth, according to a new analysis by my colleagues at the Martin Prosperity Institute.

There are three main mechanisms through which high-speed rail can help expand the economy, according to the MPI study. First, HSR expands the labor pool available to firms, bringing talented workers from nearby centers within commuting distance and thus expanding the quantity and quality of available employees. Second, HSR makes more jobs available to workers without making them have to relocate and move to a new home. Third, HSR extends the benefits of other expensive, productivity-enhancing infrastructure such as airports across broad regions. International airports, major research universities, and reference libraries are all more financially viable and internationally competitive when they serve a larger population. High-speed rail allows them to build the scale they need to achieve world-class excellence and also spreads their high costs across a wider population.

The MPI report is here.

From The Economist, December 30, 2009:

The rich world’s quiet revolution: women are gradually taking over the workplace

At a time when the world is short of causes for celebration, here is a candidate: within the next few months women will cross the 50 percent threshold and become the majority of the American workforce. Women already make up the majority of university graduates in the OECD countries and the majority of professional workers in several rich countries, including the United States. Women run many of the world’s great companies, from PepsiCo in America to Areva in France.

Women’s economic empowerment is arguably the biggest social change of our times.

From another article in the same issue:

The rich world has seen a growing demand for women’s labor. When brute strength mattered more than brains, men had an inherent advantage. Now that brainpower has triumphed the two sexes are more evenly matched. The feminization of the workforce has been driven by the relentless rise of the service sector (where women can compete as well as men) and the equally relentless decline of manufacturing (where they could not). The landmark book in the rise of feminism was arguably not Ms Friedan’s “The Feminine Mystique” but Daniel Bell’s “The Coming of Post-Industrial Society”.

Or perhaps Rise of the Creative Class is a landmark book for demonstrating why women have increasingly found a fit in the wage-earning world.

Your thoughts?

(Thanks to colleague MW for drawing my attention to the article.)

Geoff Flood, CEO of T4G Ltd., has 230 employees who develop enterprise software solutions for large organizations. Gordon Pitts of the Globe and Mail recently interviewed him.

Asked about why he has chosen to have development centers in Toronto, Vancouver, and Halifax, he answers:

We have a strategy of locating where smart people want to live. All of these cities, Toronto included, fit that bill. There is a limit to the technology resource in the country, and we need to go where bright people want to live and can thrive.

…

For example, our largest customer is in Atlanta and the work is being done in Halifax. It is a good export business; it’s good for the talent in Halifax.

Isn’t that the opposite of the old Canadian model whereby people move to where the work is – whether Fort McMurray or any mining town?

We’re in a business where we can live anywhere and work anywhere, and we don’t really care where it happens. It’s 24/7, it’s fast-paced but if you can do it in your kitchen, we don’t have a problem. We provide communities that have a great living environment with the chance to add new workers.

In Vancouver’s case, haven’t you got some contracts, as well?

We don’t typically look for the customers in the local city. We think it is better to be in the export business and compete on a larger scale, but it’s really nice if you can work at home.

Shouldn’t you be in India, where you can slash costs?

Most people would think there is some sense to doing that. But at this point the pendulum is swinging back. I don’t think the cost advantage is there in the way it might have been 10 years ago. Even for low-cost commodity kinds of work, we’re on about par. And we want to do the hard stuff, the creative stuff, and you tend to find more of the resources to accomplish that in North America.

…

We have to be better and so do they. The global competition is wonderful, and it’s something we need to be able to work with. But in the area where we work, we have a competitive advantage.

Flood also mentions being interested in harnessing the talent of Saskatoon and Lethbridge. Seems that rather than going abroad, he’s finding pockets of talent in smaller centers.

Could this be a model for future economic and business development?

At least, ban their use in meetings suggests a Forbes article this week.

Sometimes the cure is worse than the disease. To avoid wasting time in meetings, hardcore multitaskers sit there with their faces glued to their BlackBerrys, reading e-mails while they follow the discussion with one ear. But all they are doing is making the meeting longer for everyone else.

“Being busy and being productive are not the same,” says Denise Landers, a time-management consultant based in Houston. “I definitely believe that banning BlackBerrys from a conference room would lead to shorter and more effective meetings. We simply cannot multitask and perform at 100%.”

….

Another recent study, this one by the University of Texas at Austin, offers hope. Titled “The Social Influences of Electronic Multitasking in Organizational Meetings,” this report concludes that people don’t multitask because they have to; they multitask simply because they can. They see other people reading e-mail during meetings, so they do it too. But if the office culture discourages multitasking during meetings, they will stop, and focus on the issue at hand.

Even deeply ingrained habits are subject to change over time, Crenshaw notes. As every fan of Mad Men knows, smokers once routinely lit up during meetings. Now they don’t. The same thing can happen to multitasking.

“I view myself as an evangelist,” he says. “It’s going to take probably another decade of talking about this before people get the message.”

Does your workplace have a Blackberry policy? Do you?

Where I work people rarely if ever use a Blackberry while in a meeting, unless to look something up or to take a quick glance to ensure no emergencies have arisen (a few colleagues need to be available 24/7 to put out virtual “fires”). If the senior people and mentors follow this policy, it seems others stay in line.

Social media, communications technologies, and more flexible workplace attitudes have been driving changes to the way we view our personal and professional lives.

A recent Knowledge at Wharton article examines the evolving etiquette as well as challenges surrounding the rise of mobile technologies, such as the Blackberry, as well as social media websites like Facebook and LinkedIn.

As Facebook, Twitter and 24-hour Blackberry access blur the lines between business and personal lives, managers and employees are struggling to develop new social norms to guide them through the ongoing evolution of communications technology. Wharton faculty and other experts say the process of creating rules to cope with the ever-expanding reach of modern communications has just begun, but will be shaped largely by individuals and organizations, not top-down decrees from a digital Emily Post. Generational differences in the approach to openness on the Internet will also be a factor in coming to common understandings of how and when it is appropriate to contact colleagues, superiors or clients.

The article then details some dilemmas – where do you stand?

1.  First, is there a time when “work” should stop and “personal life” should take over?  From the Wharton article:

For example, a Blackberry can allow parents to attend their childrens’ soccer games while remaining in contact with colleagues at the office in case an emergency comes up. But, [Nancy Rothbard] adds, “you have your Blackberry at your kid’s soccer game. That’s another … line you may be crossing.”

2.  Is it healthy to blur your personal self and professional self ?

…says Wharton marketing professor Patricia Williams, “There is the self we are for our friends, a self for our family [and] a professional self. What’s interesting is the degree to which we are comfortable playing all of those ’selves’ at one time.”

“I’ve heard people say that Facebook is for personal friends and LinkedIn is for professional contacts,” Williams notes. “But many of my Facebook friends are my colleagues – people who work just down the hall – and I don’t have a problem with that. I do, however, have some discomfort being ‘Facebook friends’ with my students, because it gives them access to my personal self that’s not normally available to them.”

3. Are younger people, today’s children up through college students, growing up with no separation between these different “selves”?  And what will this mean for the way we work?

Typically, business norms evolve through official policy disseminated by organizations and by “reality” that bubbles up from the organization’s grassroots. [Wharton Professor Monica McGrath] asks “The question is: How accessible do you want to be? [Today,] young people want to be very accessible, and in an international corporation you are expected to be available [around the clock]. Time zones mean nothing. The norms will continue to develop based upon generational leadership.”

To sum up, I expect that the line between personal and professional will become increasingly blurred. First, knowledge work is highly collaborative and it’s hard to work with people who you don’t like – therefore, people will forge friends through collaboration at work. Second, younger generations will have grown up with limited separation between their different personas.

How do mobile and social media technologies enhance or detract from your personal and professional life?

Many things are interesting, but one of the most interesting is how people use creativity to become more innovative. I call this entrepreneurship. People in all countries are creative and want to make a better life for themselves and their families. How well are they doing?

Over the past few years, my colleagues at the Global Entrepreneurship Monitor have developed a way to measure this activity, and to suggest ways in which countries can improve on their performance. The Global Entrepreneurship Index is a tool that allows countries to understand how your country is doing on a wide range of indicators. You can download a copy for free. While lots of indexes exist, for almost everything, they very seldom allow you to actually see how to improve your current position.

Last week at a conference in Istanbul I presented the index to an audience and suggested how the world would be able to improve its well-being by following along. The results were interesting and over the next few weeks, I will be presenting a step-by-step report on the index, how it works, how it can be improved, and how it can improve lives.

I have been involved with GEM for almost a decade and have helped move this organization toward its present global position. I hope that this new index will propel it to a new level.

Jane Jacobs long ago showed us that cities are complex adaptive systems. Now new research by cognitive scientists at Rensselaer Polytechnic Institute finds that not only are cities organized along the same complex principles as the human brain, but evolve in ways that mirror the brain’s evolution.

“Natural selection has passively guided the evolution of mammalian brains throughout time, just as politicians and entrepreneurs have indirectly shaped the organization of cities large and small,” said Mark Changizi, a neurobiology expert and assistant professor in the Department of Cognitive Science at Rensselaer, who led the study. “It seems both of these invisible hands have arrived at a similar conclusion: brains and cities, as they grow larger, have to be similarly densely interconnected to function optimally.” … “When scaling up in size and function, both cities and brains seem to follow similar empirical laws,” Changizi said. “They have to efficiently maintain a fixed level of connectedness, independent of the physical size of the brain or city, in order to work properly.”

Science Daily provides a fuller summary (via Planetizen). The full paper can be downloaded from Changizi’s website.

Where will the next wave of interesting start-ups come from? For the past four decades, that answer has been a no-brainer. Past performance, however, is no guarantee of future results. Based on the competitiveness of companies playing the technology-driven innovation game, one could imagine an entirely different answer to the “next wave” question over the next half-century.

The Information Technology and Innovation Foundation has released a report benchmarking innovation and competitiveness for 36 counties (pdf). While the focus of the report is EU/U.S. differences, I found two items of particular interest: first, while the United States leads the European Union in innovation-based competitiveness, it ranks sixth overall; and the U.S. ranks last in terms of its preparation to capitalize on the next wave.

Finished Darwin’s Dangerous Idea by Daniel Dennett yet?

If not, begin now and, after that, read The Origin of Wealth and smash the two together. Add a dash of the Santa Fe Institute and you have plenty to think about. Here’s the executive summary:

“Here, then, is Darwin’s dangerous idea: the algorithmic level is the level that best accounts for…the diversity of species, and all of the other occasions for wonder in the world of nature…no matter how impressive the results of an algorithm, the underlying process always consists of nothing but a set of individually mindless steps succeeding each other without the help of any intelligent supervision.” (The Origin of Wealth, p.59)

“Neoclassical theory is in the process of being supplanted by complexity economics…the economy is a complex adaptive system…made up of realistically rational agents who dynamically interact with each other in an evolutionary system.” (Wikipedia)

Over the past three years venture capitalists and analysts have engaged in a great deal of hand-wringing about the state of venture investment: the lack of a robust exit market, declining valuations, fund-raising challenges, and more fundamental criticism that the venture model is “broken.” The solutions range from overhaul of the structural or contractual mechanisms employed by the investors; a return to the (perhaps mythical) halcyon days where venture capital investors were consumed with building businesses rather than generating returns; or even a federal bailout.

Two recent posts – one by Bill Gurley (What Is Really Happening to the Venture Capital Industry) and another by Fred Wilson (The Biggest Loser Can Be The Biggest Winner) – merit closer inspection. In his post, Gurley provides an argument and some evidence for why venture capital will shrink. In his view, institutional investors (the largest contributors to venture) will soon adjust the amount of funds they allocate to venture, and the amount of available capital for early stage investments will shrink. How much? Gurley says by up to half. Wilson builds on this post, suggesting that “the diet has begun” and that shrinking venture allocations is a good thing because the current model “is not repeatable or sustainable at scale.” Wilson reckons that “we need to get the venture capital industry investing less than $20bn a year on a sustainable basis.”

Structurally, it’s not clear at all to me that there is some inherent feature of the venture model that prevents scaling far beyond current amounts of fund-raising or allocations. In my view, as entrepreneurship globalizes, the current industry must evolve to stay relevant as a capital market actor participating in the financing of high-growth firms; and the early data detailing the fund-raising and allocation activity in venture globally tends to support this perspective. Perhaps these two recent posts are talking specifically of the U.S. share of early-stage capital shrinking to some new, sustainable level that represents the natural, normal return to equilibrium in global innovation capability. In this view, venture allocations (and perhaps fund-raising) will shrink in the U.S., and expand elsewhere. Perhaps the U.S. venture industry has something to learn from the U.S. manufacturing sector after all.

What say you?