#manufacturing coming back! #pauto #mfg #automation #smartmanufacturing

July 5, 2011







       July 5, 2011             Vol. 19, No 21


Dear Reader: I am pleased to send you this week's edition of Manufacturing Trends.  If you want to comment on any of this week's articles, please e-mail your comments to me at [email protected].  From time to time, we will feature reader "comments" in Manufacturing Trends.  Please limit your comments to 300 words or less.

FYI -- By "clicking" the title of the article you want to read in the "Contents" below, you will go directly to the full article.



Fred Wentzel


Stakeholders Applaud Obama's Advanced Manufacturing Speech

DOE/ITP Funding Available for Transformational Manufacturing Technologies and Innovative Materials

UC Berkeley Asked by Obama to Help Boost Investment in Manufacturing

Information Technology & Innovation Foundation (ITIF) Roundtable Takes First Step on Developing a National Manufacturing Strategy

What New Ethylene Crackers Tell Us

Made (again) in the USA: The Return of American Manufacturing

Why a Great Individual Is Better Than a Good Team

Great Video to Kick Off The 4th

The Race to the Top Early Learning Challenge to Emphasize Pre-K Testing

INSEAD Issues the Global Innovation Index 2011


Future Events


Stakeholders Applaud Obama's Advanced Manufacturing Speech

(IW - Frank Andorka: 6-30-11)     President Obama's Advanced Manufacturing Partnership is receiving rave reviews among some members of industry, particularly those to whom the money pledged in the speech will go.

President Obama pledged $500 million to his Advanced Manufacturing Partnership Initiative during a 30-minute speech at Carnegie Mellon's Robotics Engineering Center on Friday. AMP, as the program is called, will harness the power of public-private partnerships between universities, industry and governmental agencies in an effort to streamline innovation and bring products more quickly to market.

After a week to digest the president's speech and see what effect it would have on manufacturing technology - the focus on advanced manufacturing made it inevitable that high-tech entities would benefit immediately - the segments of industry targeted in the speech were pleased with the direction Obama is headed.

Doug Woods, president of the Association For Manufacturing Technology, gave Obama credit for going down a path most presidents fear to go down.

"It's not every day that a president will single out a segment of the economy like industry for mention," Woods said. "He wasn't picking winners, but he did single out manufacturing as critical to the future of our economy. That's a big step, and he's to be commended for it."

Woods says he's particularly excited that $300 million of the President's $500 million pledge will go directly to advanced manufacturing initiatives that will help U.S. manufacturers of machine tools regain some of the market share they've lost in the past five years.

"He doesn't just want to regain what we've lost, but he wants to lead again," Woods says. "That's refreshing to hear a president talk like that."

"It was a fantastic day for the robotics industry," said Jeff Burnstein, president of the Robotics Industry Association. "In 30 years in this industry, in fact, I can't remember a better day."

The focus on robotics with the National Robotics Initiative (NRI), coupled with the fact that the President announced his plan at Carnegie Mellon University's National Robotics Engineering Center in Pittsburgh, brought the importance of robotics in the manufacturing sector to a new height of awareness, Burnstein said.

"We'll have to wait and see if the rhetoric is followed up with the appropriate funds to help get advanced research from the laboratory to the shop floor," Burnstein said. "But Friday was a terrific start."

Jim Ryan, dean of the Joint School of Nanoscience and Nanoengineering at the North Carolina A&T University/University of North Carolina at Greensboro, said joint development of new technology between government, academia and industry will help push the process along to get new technologies to market more quickly.

"Anytime you promote partnerships between academia and industry, it's a good day," Ryan said. "You can double the intellectual and financial heft of an investment when you have that kind of collaboration, so we're excited in the nanotechnology field to see how it works out."

Ryan added that he was glad to see President Obama speak in generalities rather than picking specific parts of industry and single them out for investment.

"It's good to make broad initiatives and leave the details for individual industries to work out," Ryan said. "You'll see some companies take advantage of these new partnerships and others will not. The ones that do will succeed."

Woods seconded Ryan's thoughts.

"It's hard to get technology out to market quickly without the collaboration between government, academia and industry," Woods said. "Alone, it's difficult, but together it works well."

Woods said the next step he'd like to see the President take is to coordinate the efforts of all of the subgroups he created in his speech under the hand of one person, whether that's Ron Bloom, the President's special advisor on manufacturing, or the Secretary of Commerce.

"You don't have to have everyone walking down the same path, but there should be a North Star strategy to guide their efforts," Woods said. "That's the one missing piece out of the plan that I saw, and I'd like to see him tighten that up moving forward."

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DOE/ITP Funding Available for Transformational Manufacturing Technologies and Innovative Materials

(DOE/ITP: 7/1/11)     On June 24, DOE's Industrial Technologies Program (ITP) released its Innovative Manufacturing Initiative funding opportunity announcement in support of President Obama's Advanced Manufacturing Partnership. This solicitation seeks applications in line with ITP's mission to invest in manufacturing engineering and development to enable rapid, low-cost, energy-efficient manufacturing.

Up to $120 million will be available over three years to develop transformational manufacturing technologies and innovative materials to reduce time, cost, and energy requirements associated with manufacturing.

Projects involving innovations in the earlier stages of development, such as applied research or proof-of-concept projects, will be eligible for awards of up to $1 million.

Projects that are further along in their development, such as laboratory testing or verification of a prototype system, will be eligible for awards of up to $9 million.

DOE expects to select 35-50 cost-shared projects involving innovative manufacturing and novel materials concepts that are revolutionary in their design or impact and capable of addressing manufacturing energy productivity.

Applicants are encouraged to form collaborative teams equipped with both technical and commercial capabilities to enhance their prospects for success.

Applicants must submit a Letter of Intent by August 1, 2011, in order to be eligible to submit a Full Application by August 25, 2011.

(See the DOE press release, the funding announcement on EERE eXCHANGE, and the ITP website.)

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UC Berkeley Asked by Obama to Help Boost Investment in Manufacturing

(Digital Manufacturing Report: 6-29-11)    UC Berkeley will play a key role in a national effort recently created by President Obama to ensure that the United States remains what he calls "a nation that 'invests it here and manufactures it here' and creates high-quality, good paying jobs for American workers."

Chancellor Robert Birgeneau was among six university leaders who met with Obama at Carnegie Mellon University on Friday, June 24, during the launch of the Advanced Manufacturing Partnership (AMP). These university presidents and chancellors will work with leaders of major U.S. manufacturers and federal government leaders to build a roadmap for advanced manufacturing technologies.

"The partnership will be critical in stimulating the efforts of government, industry and universities to define the path forward for U.S. leadership in advanced manufacturing," Birgeneau said. "I am pleased that the University of California, Berkeley, was called upon to play a leadership role in applying its expertise and direction to this critical initiative."

"At UC Berkeley, we agree with the premise of President Obama that economic development and the creation of societal benefit to the U.S. has to take the additional step of incentivizing the creation of design, rapid prototyping and manufacturing technologies to the existent innovation pipeline," said engineering Dean Shankar Sastry. "With traditional strengths in semiconductor manufacturing; precision machining and manufacture; technologies for green industry, such as biofuel production, photovoltaics and building energy efficiency technologies; and a vision for educating a new generation of engineering leaders, UC Berkeley is very pleased to have been chosen to be one of the six lead universities in AMP."

"We are still the largest manufacturing country in the world by volume, but a lot of manufacturing is going overseas, in part because we aren't creating and replenishing the skilled workforce that can actually run the facilities and machinery that make today's advanced products," said David Dornfeld, chair of mechanical of engineering, who is working with Birgeneau on the AMP.

"You have to have the driver of academic research and development for innovative products and you have to have the educational infrastructure to be able to train people to produce them," he said. "That is what the big challenge is going to be."

The president's plan will leverage existing programs and proposals but also invest more than $500 million in key areas to jumpstart the effort. These areas include: building domestic manufacturing capabilities in critical national security industries; reducing the time needed to make advanced materials used in manufacturing products; establishing U.S. leadership in next-generation robotics; increasing the energy efficiency of manufacturing processes; and developing new technologies that will dramatically reduce the time required to design, build, and test manufactured goods.

Leading universities and companies will complement these federal efforts helping to invent, deploy and scale these cutting-edge technologies.

The AMP is being developed based on the recommendation of the President's Council of Advisors on Science and Technology (PCAST), which released a June 24th report entitled Ensuring Leadership in Advanced Manufacturing.  The PCAST report calls for a partnership between government, industry and academia to identify the most pressing challenges and transformative opportunities to improve the technologies, processes and products across multiple manufacturing industries.

UC Berkeley has always had a very strong tradition in manufacturing, Dornfeld said, most prominently in the semiconductor industry involving methods for making integrated circuits. But it has also had an impact on traditional industries, such as automotive manufacturing, precision manufacturing and microelectromechanical systems (MEMS), and design and control of advanced vehicles.

The College of Engineering also will launch this fall a new, one-year Professional Master's program that will include elements of entrepreneurship and manufacturability and innovation. The degree program has been created through the new Coleman Fung Institute for Engineering Leadership "to address the concerns that the U.S. is not providing a workforce which is able to treat the needs of industry in manufacturing," Dean Sastry said.

UC Berkeley, MIT, Carnegie Mellon University, Georgia Institute of Technology, Stanford University and the University of Michigan will form a multi-university collaborative for sharing educational materials and best practices related to advanced manufacturing and its linkage to innovation.

"I think we are going to see a rebirth of interest in manufacturing, and in fact, we're seeing that now in our mechanical engineering students," Dornfeld said.

He referred to a recent study that identified 1.5-2 million jobs now unfilled in this country because the workforce lacks the skills needed to operate advanced manufacturing equipment.

"That is the market we are trying to address. Get those people educated and get them into those jobs - and that may involve the whole California educational structure - and keep creating the processes and products that drive manufacturing and industry forward," Dornfeld added.

(For more details on the AMP, link to the White House press release.)

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Information Technology & Innovation Foundation (ITIF) Roundtable Takes First Step on Developing a National Manufacturing Strategy

(ITIF - Stephen Ezell and Robert Atkinson: 6-26-11)    ITIF held its first Roundtable on June 2 to begin development of recommendations for a national manufacturing strategy.  The Roundtable reflected the growing policy consensus that manufacturing is vitally important to the health of the U.S. economy and that the U.S. needs a national manufacturing strategy.  To that end, Roundtable attendees discussed core policy areas/policy recommendations to bolster U.S. manufacturing and began to establish policy priorities on which they "shared common agreement."

ITIF plans to turn the Roundtable into an ongoing working group that convenes quarterly to carry the momentum forward.  By acting collaboratively this group will be able to present a stronger voice to policy makers about the importance of manufacturing to the U.S. economy and the types of policies needed to support it.

(See below for a report issued on April 26, 2011 by ITIF, spelling out the need for a national manufacturing strategy ... and setting the framework for the June 2nd Roundtable.)

The Case for a National Manufacturing Strategy - ITIF

U.S. manufacturing is in crisis, with almost 6 million jobs lost and 42,000 factories closed over the last decade. Even worse, we are losing know-how and ultimately control over our future. While the U.S. retains important strengths, U.S. manufacturing competitiveness is slipping rapidly. There is no reason to resign ourselves to defeat or to sugarcoat the challenges we face. We possess the tools, talent, and resources to revive manufacturing. But to do so we need a national strategy for manufacturing renewal. This report explains the five key reasons why we need to act quickly and boldly to revitalize our manufacturing sector.

Executive Summary

This paper builds the intellectual case for why the United States needs a serious national manufacturing strategy. The paper focuses on three key questions where to date consensus has been lacking:

·        Does the United States need a healthy manufacturing sector?

·        How healthy is U.S. manufacturing at the moment and for the foreseeable future?

·        Does the United States need a national manufacturing strategy?

Until there is a consensus that manufacturing is important, that it is not healthy, and that a national manufacturing policy is needed, it will be difficult to create a platform for reframing the conversation. Meanwhile, other nations are putting in place manufacturing strategies that include key components such as tax incentives and large investments in research, skills development, infrastructure, and technology transfer and technical assistance. Every day we do nothing we risk falling further behind.

Manufacturing plays a critical role in the U.S. economy for five key reasons:

·        It will be extremely difficult for the United States to balance its trade account without a healthy manufacturing sector.

·        Manufacturing is a key driver of overall job growth and an important source of middle-class jobs for individuals at many skill levels.

·        Manufacturing is vital to U.S. national security.

·        Manufacturing is the principal source of R&D and innovation activity.

·        The manufacturing and services sectors are inseparable and complementary.

Many who argue against a national manufacturing strategy do so because they claim that U.S. manufacturing is quite healthy and that any job losses are due to superior productivity performance; or they assert that manufacturing is in decline everywhere, such that relative decline in U.S. manufacturing is not a particularly noteworthy concern.

This section rebuts both those mistaken perspectives, arguing that:

·        Output growth in U.S. manufacturing sectors is overstated and, when measured properly, job loss in U.S. manufacturing is a reflection also of output decline, not just of productivity increases.

·        U.S. manufacturing decline is neither "inevitable" nor "normal" as demonstrated by the fact that manufacturing is growing in many nations, including developed nations.

Beyond the importance of a robust manufacturing sector to economic health, there are three primary reasons why the United States needs a national manufacturing strategy:

·        Other countries have strategies to support their manufacturers and by lacking similar strategies we are therefore forcing our manufacturers to compete at a disadvantage.

·        Systemic market failures mean that absent manufacturing policies, U.S. manufacturing will underperform in terms of innovation, productivity, job growth, and trade performance.

·        If a country loses complex, high-value-added manufacturing sectors, it's unlikely to get them back, even if the dollar were to decline dramatically.

It's important to understand that a considerable part of the loss in U.S. manufacturing jobs has not just been a story of higher productivity leading to fewer jobs-as was the case with the transformation of the U.S. agricultural sector over the last century. It's been more a story of decline in output due to a loss of international competitiveness. This is why the decline of U.S. manufacturing merits a serious policy response.

To call for a U.S. manufacturing strategy is not to call for the same kind of sectoral or occupational composition in manufacturing that the United States had twenty or fifty years ago. It's not to wish nostalgically for the re-creation of all the lost jobs from factories employing low-skill workers and producing commoditized products.

Obviously the profile of manufacturing evolves over time, just as the U.S. economy evolves. Rather, it's a call to restore U.S. manufacturing to a competitive position in the global economy, even though the industries and jobs will look very different than they did a generation ago.

Moreover, to call for a national manufacturing strategy is not to call for a de facto, heavy-handed industrial policy that "picks winners and losers" (for example, by picking Duracell to be the nation's lithium-ion battery champion). Rather, we mean a process of designing our nation's tax, regulatory, and innovation policy environments to make the United States the world's most attractive location for advanced manufacturing (including both domestic and foreign direct investment).

There is a groundswell emerging for a comprehensive U.S. national manufacturing strategy, with numerous public agencies, policy organizations, corporate leaders, and elected officials calling for, writing about, and speaking of the need for a U.S. manufacturing strategy. Many of these reports and studies present specific recommendations geared toward certain stakeholders, while others offer more general recommendations, some complementary, some competing.

ITIF seeks to use this paper to coalesce support around a consensus on core principles for why now is the time for a serious national manufacturing strategy for the United States. We can be a more powerful voice together than any of us can be on our own.


June 1, 2011

Consolidating the Multitude of Reports Calling for Boosting U.S. Manufacturing Competitiveness

ITIF consolidates manufacturing reports for easy access by policymakers, executives, and the public.

April 26, 2011

Video Slideshow: The Case for a National Manufacturing Strategy

In this brief video presentation, ITIF Communications Director Steve Norton lays out the thrust of ITIF's report, "The Case for National Manufacturing Strategy."


June 29, 2011

Sustaining Biotech Innovation in an Era of Austerity

June 15, 2011

Technology and Automation Create, Not Destroy, Jobs

June 10, 2011

Innovation in Energy Technology: Ensuring a Secure and Sustainable Energy Future

June 1, 2011

Consolidating the Multitude of Reports Calling for Boosting U.S. Manufacturing Competitiveness

May 20, 2011

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What New Ethylene Crackers Tell Us

(Energy Outlook - Geoffrey S. W. Styles: 6-27-11)   Sometimes a news item informs us about much more than the event in question. I think the recent announcements of new petrochemical projects in the US fall into that category. Both Shell and Dow Chemical are planning new ethylene crackers in the US, a market in which established ethylene facilities were being shut down only a few years ago, as part of the demand destruction necessary to balance natural gas demand with shrinking US supplies. Anyone looking for further indications of the game-changing nature of shale gas need look no further than these projects. Yet they also give us intriguing hints about two other situations of great interest: global oil prices and US economic growth.

The Shell project is of particular interest, because of its location. The company is apparently planning to locate it in Appalachia, where it will depend on the byproducts of natural gas produced from the giant Marcellus shale deposit. Considering that most of the other ethylene crackers in the US are located on or near the Gulf Coast, where gas can be supplied from numerous onshore and offshore fields, that's a remarkable endorsement of the potential of the Marcellus. You just wouldn't leave such a facility dependent on one gas field if that field was not both very large and likely to be producing for a very long time. Anyone suggesting that shale gas is a flash in the pan should look long and hard at this project, as I'm sure Shell has done.

It's also worth pausing to recall the way Shell approaches projects like this. Shell is one of the pioneers of scenario planning, and its business plans are all based on its periodic, carefully developed views of different potential futures. I wouldn't assign some notion of infallibility to this; Shell has made its share of mistakes in the last decade, too. However, it does suggest that the company's decision to invest in this project wasn't just based on a straight-line extrapolation of current conditions. The decision to build an ethylene cracker, a facility that turns the heavier components of natural gas into one of the basic building blocks of the petrochemical and plastics industry, in such a location is a big vote of confidence. It suggests that Shell has concluded that the current uncertainties facing shale gas development are very likely be resolved without undermining shale's capacity to produce large quantities of gas at relatively low cost, and that shale developers will find ways to resolve concerns about fracking, methane emissions, and other issues both with the affected communities and with state and national regulators.

These projects also suggest at least two other things:

First, as the Reuters article noted, they represent sizable wagers on the relationship between the global price of oil and the US price of natural gas. I've commented before on the extraordinary divergence between the two, with oil bouncing around the $100 per barrel mark and US natural gas selling for the energy equivalent of $25 per barrel. A company would be unlikely to make a long-term investment like this if it thought gas and oil were likely to move back into parity any time soon. Even if gas prices eventually recover to around $6 per million BTU, as suggested by current long-dated gas futures, that's still the equivalent of less than $40/bbl--an oil price we haven't seen since the worst stretch of the global recession and financial crisis in early 2009.

And that leads to the second implication I draw from this news: these investments are bets on the health of the US economy. If the economy were headed for a protracted period of slow or no growth, adding petrochemical capacity here would be too risky, rather than putting it in the Middle East, where gas is even cheaper and the growing markets in Asia are much closer.

That doesn't' mean that our problems of high unemployment, high indebtedness, and gaping federal, state and local budget deficits aren't extremely challenging, but it provides at least one modestly positive sign among the many ominous ones that are routinely amplified by the basic nature of the news media business.

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Made (again) in the USA: The Return of American Manufacturing

(FORTUNE - Nin-Hai Tseng: 6-29-11)       Lost in a sea of troubling economic data is one bright spot: America is once again competing for -- and winning -- factories and manufacturing operations.

Until the end of World War II, America's economy was almost completely self-sufficient. Everything it consumed it also produced. The big shift away from manufacturing came as the U.S. sought to speed the recoveries of war-ravaged Europe and Asia. Trade barriers fell significantly and soon American companies were sending emissaries abroad, looking to do business cheaper by expanding their operations overseas.

The golden era of manufacturing would never come back. By the 1980s, manufacturing made up 25% of U.S. labor; it has fallen to about half of that in recent years as technological advances that greatly reduced the costs of transportation and communication also made it cheaper to have operations outside the U.S.

But in the after glow of the Great Recession, something surprising is happening: U.S. manufacturing appears to be on the cusp of an awakening - if not a full rebirth. Companies like Illinois-based Caterpillar (CAT), the world's largest maker of excavators and bulldozers, is shifting some of its excavator production from abroad to Texas. U.S. furniture maker Sauder is moving production back home from low-wage countries. According to the report by Accenture, some 61% of manufacturing executives surveyed by the consultancy said they were considering more closely matching supply location with demand location by re-shoring manufacturing and supply.

The reasons why have more to do with problems overseas than strength at home:

• Overseas workers are getting more expensive. China, known as the world's factory, is seeing wages soar ahead of productivity growth. In 2000, hourly Chinese manufacturing wages were just 52 cents compared to $16.61 in the U.S., according to a recent report by Boston Consulting Group. By 2015, the wage difference should be $4.41 vs. $26.06 - still powerfully in China's favor, but no longer a no-brain decision to hire there. And the growth rate should continue to build in China while BCG expects the US to grow at a much slower rate. As the cost savings of off-shoring narrows, BCG says it expects the return of some U.S. manufacturing.

• Shipping costs keep increasing. On top of wage increases, the costs of jetting to far flung locations and more importantly, moving goods from the factory to the store keeps heading upward. In the last four years, shipping costs have risen 71% because of higher oil prices, as well as cutbacks in ships and containers, according to IHS Global Insight.

• Global supply chains have shown weak links. Perhaps little highlights the issue more recently than the March earthquake and tsunami in Japan. Aside from the human tragedy, the disaster disrupted global supply chains, leaving many companies stranded without critical components. Boeing (BA), Caterpillar, and General Motors (GM), were among those concerned that the disaster would disrupt delivery of components and parts from Japan and therefore stall production.

To be sure, a so-called "manufacturing renaissance" will likely come in trickles as opposed to waves. Products that are labor intensive such as apparel and textiles will likely continue being made overseas. Even if labor costs rise in China, there's almost always another country that would do the job relatively cheaper.

And then there is the booming emerging economies to consider.

"If companies moved operations to China for labor arbitrage, they're likely rethinking their presence there," says Craig Giffi, vice chairman of consumer and industrial products at Deloitte LLP, a consultancy. "But if they went there because of it's massively growing market and their customers are there then they're likely going to stay."

What's more, there are sizeable limits over how many more jobs re-shoring would create. The days of thousands of factory workers toiling away in warehouses are long gone, as technological advances have increasingly replaced humans with machines. While manufacturing as a percentage of the labor force has plummeted from 25% in 1980 to about roughly 12% today, the value of goods and services produced has remained 12% of the U.S. economy. In other words, manufacturing has been able to produce more even with many less workers.

Fortune takes a look at what it a revitalized made-in-the-USA label means for the country - and the world - in a series of stories on the new movement:

How to train U.S. workers back into manufacturing jobs  
Despite gloomy job prospects, many American manufacturers are on the prowl for top talent, but say that not enough workers are trained for the tasks.

The secret role of energy in bringing U.S. jobs back
How a reliable grid can trump cheap wages.

Why we left our factories in China
Fed up with the poor quality of having their products made in China, American businesses like Sleek Audio are moving production back home.

Investors pile into the bet against China
Manufacturing jobs are leaving China and returning to the U.S. But many investors are betting that that may actually be the least of China's problems.

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Why a Great Individual Is Better Than a Good Team

(HBR - Jeffrey Stibel: 6-27-11)    Anytime a CEO, quarterback, engineer or author is paid ridiculous amounts of money, dozens of investors, armchair quarterbacks, and scholars jump in to debate the value of individual contributors versus teams. Bill Taylor wrote the most recent of many interesting pieces, where he argued provocatively that "great people are overrated," in response to Facebook CEO Mark Zuckerberg's comment that a great engineer is worth 100 average engineers.

I have heard plenty of people argue that no one individual is worth the price of many. But interestingly, I have never heard it from a leader.

As a CEO, I have run public companies, private companies, startups, turnarounds, and divestitures - in each and every case, I have never seen a situation where quantity is better than quality when it comes to people. Never. Great people are both hard to find and worth an infinite number of average people.

And as a brain scientist, I know that great individuals are not only more valuable than legions of mediocrity, they are often more valuable than groups that include great individuals. Here's why:

The truth is, our brains work very well individually but tend to break down in groups. This is why we have individual decision makers in business (and why paradoxically we have group decisions in government). Programmers are exponentially faster when coding as individuals; designers do their best work alone; artists rarely collaborate and when they do, it rarely goes well. There are exceptions to every rule, but in general this holds true.

There is clearly not widespread acknowledgment about the benefits of individual contributors - in many ways, it goes against our inclination towards equality. And thank goodness, because that gives those of us who understand the real value of great people a huge competitive advantage! But for anyone interested in making better decisions about their teams, it is worth spending some time understanding the science behind individual greatness.

In many ways, individual people follow an inverse rule relative to networks of people. Consider the two fundamental laws of networks: both Metcalfe's Law and Reed's Law assume that as a network of people grows, the value of the network increases substantially. (In Metcalfe's Law, the value of the network is proportional to the square of the number of people in the network, whereas Reed's Law demonstrates that the value for any individual within a network grows exponentially with every new member.) But with individuals, the opposite is true: The value of a contributor decreases disproportionately with each additional person contributing to a single project, idea, or innovation.

This is true across all areas but only so far as there are discrete pieces of work to be done. To be sure, there is clear value in having a marketing person work with a programmer on a project or a biologist working with a chemist on a problem. Proper team building is a powerful thing. But when an activity can be performed sufficiently by one person with adequate skills, doing the activity as a group should be avoided.

The concept of declining incremental value is essentially a "power function" or, more technically, a scale invariance

 -- where the greatest impact comes from the smallest proportion of the population. There are numerous examples of power functions, including Stevens' law, Keplar's law, the long tail, Zipf's law, and the Pareto principle (or 80/20 rule). And power laws explain plenty of events in nature (i.e., earthquakes), finance (i.e., income distribution), language (word frequency), and even ecommerce (i.e., book sales on Amazon). Virtually all complex systems follow power laws within the system itself.

Here's how power functions relate to the brain. As described in my book Wired for Thought, the brain is a complex network of neurons. There are around 100 billion neurons connected to one another in the brain and they follow a network law - the value of a neuron is exponentially more valuable as the overall neural network grows. But when the brain becomes highly active, it reverts to a power law where a spike in activity is followed by a lull. Informally called neuronal avalanches, these spikes have been linked to knowledge transfer and storage, communication, and computational power - in short, intelligence.

The same is true when it comes to people. Our intelligence is incredibly complex and as a result, a great individual can far exceed the value of many mediocre minds. This is why it is absurd to ask questions like "how many mediocre people would it take to collectively beat Kasparov in a chess match?"

Mediocre minds can also destroy the value or contribution of a great mind. No matter how good Kasparov is at chess, he would not do well playing doubles with a mediocre chess player against Bobby Fisher alone. Or take Michelangelo's David as an example. A second artist cutting into David would cause massive destruction to the sculpture, even if that artist was Picasso. With each successive stroke of the chisel from additional artists, David's value, beauty, and overall impact would diminish. A perfect -- albeit destructive -- example of a power function.

Leaders need to make tough decisions all the time. One decision is easy: find the best people and empower them to do great things.

(Jeffrey Stibel is Chairman and CEO of Dun & Bradstreet Credibility Corp.)

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Great Video to Kick Off The 4th

(Evolving Excellence - Bill Waddell) 7-1-11)    Thanks to the Society of Manufacturing Engineers (SME) for this great, short manufacturing video; and thanks to Jerry Miller for sharing it with me.

Hope you all take a few minutes to watch it, and hope you all have a great holiday weekend with your families.


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The Race to the Top Early Learning Challenge to Emphasize Pre-K Testing

(Education Week - Michelle McNeil: 7-1-11)    To win a grant in the U.S. Department of Education's new Race to the Top competition for early-childhood education aid, states will have to develop rating systems for their programs, craft appropriate standards and tests for young children, and set clear expectations for what teachers should know.

That's according to the proposed rules released today by the Obama administration that will govern the $500 million competition, which was made possible by the fiscal 2011 budget deal Congress passed in April.

U.S. Secretary of Education Arne Duncan was given $700 million in new Race to the Top money, and chose to put most of it into early education, while keeping a $200 million slice to award to runners-up from last year's competition. (Details of that separate contest have yet to be announced.)

The Race to the Top-Early Learning Challenge awards will range from $50 million to $100 million, depending on a state's population, and the contest is open to all states, not just the winners in last year's competition.

This could be especially attractive for small states, which were eligible for maximum grants of $75 million in the first edition of Race to the Top. For big states, $100 million won't go as far; the biggest states in the original Race to the Top won $700 million each. For this early-learning competition, four states-California, Florida, New York, and Texas-are eligible for $100 million.

In crafting this new iteration of Race to the Top, the Obama administration is building upon the success of last year's $4 billion competition, which pushed states to embrace charter schools, merit pay for teachers, and better data systems. This competition is designed to improve the quality of and access to early-childhood programs, and to eliminate some of the "vast inequities" in care, said Special Assistant to the President for Education in the White House Domestic Policy Council Roberto Rodriguez, speaking in a call with reporters Thursday afternoon.

"We believe this Race to the Top can have the same kind of impact," Rodriguez said. "How do we really do more to boost the quality of our early-learning programs?"

Under the competition guidelines developed by the Education Department-working with the U.S. Department of Health and Human Services-a winning state must:

·        Come up with and use early-learning and development standards for children, along with assessments;

·        Develop and administer kindergarten-readiness tests, and develop rating systems for early-education programs;

·        Demonstrate cooperation across the multiple agencies that touch early-childhood issues (from departments of health to education), and establish statewide standards for what early-childhood educators should know;

·        Have a good track record on early learning, and an ambitious plan to improve those programs;

·        Make sure early learning and prekindergarten data is incorporated into its longitudinal data system.

(And no, states do not have to develop pay-for-performance plans for early childhood teachers-which was an important component in the first Race to the Top competition.)

In a nod to rural districts and advocates, who often feel overlooked by the department, the Obama administration says it may go out of its way to reward states with large rural populations, potentially bypassing a higher-scoring urban state in favor of lower-scoring rural state.

Just as in the original Race to the Top, this competition will rely on outside judges to pick the winners. But the ultimate decision rests with Duncan.

Because the department has to get these awards out the door by the end of this year, officials have waived the typical rulemaking process. But they are asking for input.

The public can comment on the proposed criteria through July 11. Applications will be available in late summer, and awards will be made by the end of the year. States will have until Dec. 31, 2015 to spend their winnings.

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INSEAD Issues the Global Innovation Index 2011

(Innovation DAILY: 6-30-11)       INSEAD -- the leading international business school -- announced the findings of The Global Innovation Index (GII) 2011 edition.  Switzerland topped this year's GII ranking, gaining three spots from its position in last year's GII.  Sweden and Singapore follow in the 2nd and 3rd positions, respectively.

Joining INSEAD as Knowledge Partners for the report were Alcatel-Lucent, Booz & Company, the Confederation of Indian Industry (CII), and the World Intellectual Property Organization (WIPO), a specialized agency of the United Nations.

This year's rankings show how innovation has become a global phenomenon.  In addition to Switzerland (1st), Sweden (2nd) and Singapore (3rd), the Top 10 list includes four other European economies (Finland 5th, Denmark 6th, the Netherlands 9th and the United Kingdom 10th) ... one more from Asia (Hong Kong, SAR, China 4th) ... and two from North American (the United States 7th and Canada 8th).

‘Innovation is critical to driving growth in both developed and emerging economies, especially during a time when the global economy is still in a state of recovery,' said Soumitra Dutta, Roland Berger Professor of Business and Technology at INSEAD and editor of the study. ‘The GII has evolved into a valuable benchmarking tool to encourage private-public dialogue including policy-makers, business leaders and other stakeholders.'

WIPO Director General Francis Gurry stressed that ‘Innovation is central to economic growth and to the creation of new and better jobs. It is the key to competitiveness for economies, for industries and for individual firms.' He added that ‘innovation and its many benefits do not come without the investment of time, effort and human and financial resources,' noting that this report captures efforts by a large number of economies to provide an enabling environment that promotes innovation.

Shumeet Banerji, Chief Executive Officer of Booz & Company added: "The ability to innovate is the great equalizer in the global economy. In the industrial era, nations relied on their natural resources to compete. Today, any country can advance with carefully focused investments in talent and R&D. The performance of some emerging economies in this year's GII shows what nations can accomplish with a focus on building 21st century economies."

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This comment comes from Sandra Everett, Nord Advanced Technologies Center, Lorain County Community College, Elyria, Ohio, in response to the article on "President Obama's Jobs Council Ideas for an American Jobs Plan" in the June 20th edition of Manufacturing Trends:

"Over the years, we have implemented a great deal of training and education in this area, through Apprenticeship Programs, customized training, etc.  The idea that this can be accomplished in one year will greatly depend on the education and background of individuals coming into new areas of skilled trades and technician positions.  The words qualifying candidates are critical.  Appropriate assessments will be required for each area of technology to see where the individuals currently are academically (math, computer skills, etc.), as well as technically (specific technical knowledge) prepared, and the results of the assessments will determine how long it will take to get the individuals up-to-skill for advanced manufacturing jobs."

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Future Events

October 17 -- 20, 2011 - The International Society of Automation (ISA) announced that ISA Automation Week 2011 will be held next year at the Arthur R. Outlaw Mobile Convention Center in Mobile, AL. 

"ISA Automation Week will continue to raise the bar for the technical conference. With an exhibitor waiting list of almost 50% of our total 2010 capacity, we're expanding in response to the positive feedback and interest industry has shown this premier event. ISA's unbiased technical content is, and has been for decades, unmatched by most other automation conferences in the US and perhaps the world," said ISA Executive Director and CEO Pat Gouhin.

Conveniently connected to the convention center via a skywalk, the Renaissance Mobile Riverview Plaza Hotel will serve as ISA's official host hotel. Historic Battle House Renaissance Mobile Hotel & Spa will provide additional meeting space for auxiliary events held during ISA Automation Week 2011.

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NACFAM helps its members address important manufacturing-related challenges in four major areas:

For information on how NACFAM can help your company or organization ... and/or how you can become a NACFAM member, call Fred Wentzel at 202-367-1247 or e-mail him at [email protected].


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