Creative Destruction

Creative destruction has played a role in our economy for as long as there has been commerce.  And human nature being what it is the introduction of technology and innovation has been met by two forces.   We either embrace it or fear it.    

Those who embrace change place their trust in their own creativity, ingenuity and the markets.  For those who are fearful they prefer to have someone else (government) manage the change.   

Some individuals fear that robots and technology are going to take their jobs.  Just like blacksmiths were not pleased with the introduction of the automobile - automation will create winners and losers.  The introduction of the tractor to the farm increased supply – driving down the price of agricultural goods - thus leaving purchasers with more disposable income to spend on something else.  If someone had not invented the tractor or the automobile we may never have seen the smartphone.      

The people over at the Pew Research Center conducted a survey of strategic thinkers, technologists, scholars and other education leaders inquiring about the future of the workplace.   

70% said they envisioned new educational and training programs that would quickly and flexibly identify new skills that were needed in the marketplace and adapt over and over again to provide training in whatever is needed.  Rather than attempting to anticipate what the job market will need they would be able to seek out training facilities that are connected with global businesses that would feed them real-time data on their employment needs.   Some of the respondents imagined that these training facilities will replace our old-school - and slow to adapt - system colleges and universities. 

A number of the respondents suggested that we should focus upon differentiating those human talents that machines and automation are unsuited to duplicating.  These are talents such as abstract thinking, creativity, complex communication, collaborative activities and the ability to thrive in creative environments.  Additional ‘softer’ social and emotional intelligence skill sets include the capacity to manage public relations, networking and marketing.  

If you take the time to think about it innovation isn't the end of the world and it doesn’t have to be a zero-sum game.  

Embrace the chaos..  

Beating Terrorists the Old-Fashioned Way

This adds another twist on hundreds of years of the ancient art of falconry - the sport of kings.

It would seem the bad guys have learned to modify remotely-controlled unmanned aerial vehicles (UAVs) to spy on the good guys, intrude upon restricted airspace and deliver ordnance upon the good guys.  What to do?  Borrow a page or two from the history books.   

Named after characters in the 'Three Musketeers' the French military has been raising four golden eagles - d'Artagnan, Athos, Porthos and Aramis – and is training them to take out UAVs.  Rather than spending a bazillion dollars on a high-tech mechanism to zap the bad-guy drones here’s a creative reuse of old-school technology to hunt-down an aerial intruder.   I’m not making it up – you can learn more about this story here.  

What next?  A modern-day trebuchet?

King Coal or Humpty Dumpty

At the end of the month of March President Donald Trump made a dramatic display of executive power at the Environmental Protection Agency by signing an executive order to turn-back EPA regulations enacted under President Obama.

“My administration is putting an end to the war on coal,” Trump exclaimed.

This unique focus on coal is both curious and intriguing.  It's not like coal mining is a particularly appealing or desirable job.   The role of coal in producing electricity is shrinking and continues to shrink.   Coal produces maybe 30% of our power - down from 55% in its glory days - and by 2020, it will be exceedingly lucky to maintain a grip on a fourth of the energy generation market.  The relentless march of natural gas and renewable sources of energy are unforgiving.   Horizontal drilling and fracking technologies are safer, gas is more abundant, renewables are growing less expensive and apparently are not going away.  In summation they are cleaner, growing cheaper and they are here to stay.   

Instead of investing money to train coal miners for other jobs and develop new industries for coal country we spend over a billion dollars on black-lung healthcare for the miners.  Admittedly, this blogger would tell you that statement is a cheap shot at miners.  Nevertheless, in less than ten years an additional 13,000 coal mining jobs have been lost.  All the while other industries - newspapers among them - have lost more jobs.  Coal mining and coal burning is dangerous and dirty work, it's destructive to the environment, it's expensive relative to other energy sources and it should be a relic of the 19th and 20th centuries.  It is a dying industry on life support.  

What's so special about coal and coal miners?  

To be certain I can be sympathetic to the miners, their families, communities and employers that are impacted by the decline of coal - but nothing lasts forever.   I have blogged about this painful creative destruction or creative disruption before as products, services and labor continue to be priced according to market-forces of supply-and-demand.  The developments of cutting edge technologies, inexpensive, abundant and clean natural-gas are rendering coal obsolete.   I dunno, perhaps the future technological breakthrough will make coal viable again.  

I would like to ask if the coal miner is now the modern day working class hero.  Or are they the current detritus cast-off as a consequence innovation and technology.  Or are they convenient props for opportunistic politicians?  

Last year a candidate promised job retraining but the miners would tell you there isn't a demand for retraining.  If I had to hazard a guess it is easier to blame immigrants, liberals and others for your problems than it is to adapt and adjust.   

Last year a different candidate promised hope to people whose family livelihood has been coal for multiple generations.   Was this a calculated and cynical move?  

Plenty of communities have transformed themselves into innovative cities.  No surprise if you embrace the challenge.  People there created opportunity, or moved to join it.  West Virginians and Kentuckians could have done the same thing, but they didn't (or haven’t yet). 

It is going to be interesting to watch from the sidelines how this all plays-out…

Creative Destruction

Creative destruction refers to the incessant product and process innovation mechanism by which new production units replace outdated ones. 

This term was coined by Joseph Schumpeter back in 1942.  He considered it 'the essential fact about capitalism'.  Sure, it might make someone squirm but that's what capitalism is all about.  

When I was a child a burger at McDonald’s was fifteen cents.  And a trip to McDonald’s wasn’t a convenience as much as it was a novelty and a special treat.  Nowadays, there is a movement pushing for a $15 and hour minimum wage – for simply standing behind the counter and politely saying ‘Welcome to McDonald’s - may I take your order?’    

We’ve come a long way from 15 cent burgers to $15 an hour unskilled starter jobs so pardon me for sounding somewhat curmudgeonly.  Faced with rising costs agitated by the labor movement – those corporate giants in the fast, consistent and convenient food business are going to respond with technological innovations.  Technology that mimics a tablet such as self-service kiosks for ordering your meal.   

I encountered one of these for the first time in the food court of The Louvre in Paris, France.  Yup.  A McDonald’s in The Louvre.  And it only took me a short while and a couple of tries to figure it out.  Pick your language, place your order via touch screen, insert your chip-enabled card, take your slip and walk over to the queue and someone will hand you your meal or soft-drinks.  Simple and fast.   

It’s not just McDonald’s that has embraced job-replacing technology - plenty of other restaurant operations have turned to this type of technology as a fix for rising labor costs.  A fix that won’t necessarily inconvenience the customer.  

Those $15 jobs aren’t being threatened by immigrants – it is the relentless march of technology.  You can learn more about this technology and additional ideas here.