Monday, October 27, 2003

Back to the Future of Innovation?

Are we about to go back to innovation as our economic salvation or will we continue our anorexic trends to oblivion?

U. S. corporations are anorexic. They are addicted to cost reduction, because they know it is the one thing they can control. Important to understand are the facts that this cost reduction is not the result of innovation, but rather the results of outsourcing (domestic & foreign), contract work, part-time work, downsizing, delayering, and replacing experienced and well paid employees with inexperienced and lower paid employees. This has resulted in:

- Since July 2000, 2.7 million manufacturing jobs have been lost

- The IEEE reports that the U.S. lost 560,000 high tech jobs in 2001-2002

- New York Times reports that more than half of the manufactured goods that American's buy are made abroad, up from 31% in 1987

- Forbes predicts that by 2015 more than three million white collar jobs will be out sourced to other countries

- New York Times reports that the proportion of U.S. workforce employed in manufacturing has fallen to 11% from 30% in the mid 1960s

- In 2002 almost $1 trillion worth of foreign-produced manufactured goods were imported, much of this manufactured specifically for the U.S. market

Have we forgotten one of the basic tenants of the U.S. economy? That basic tenant is that innovation provided the productivity that allowed workers to be paid enough money to enabled them to purchase the very goods and services produced by the economy. For whatever you can say about Henry Ford, he deeply understood this tenant. His movement to rationalize the manufacturing process was to get the cost of the goods produced (an automobile) down to the point that the very people working on the manufacturing line could afford to purchase it. The successful implementation of a correct pattern of innovation (product, process and procedure; incremental, distinctive and breakthrough) resulted in lower cost, mass market acceptance and higher pay for the workers. That is a very different thought than what is currently driving the manufacturing industry.

Isn't it time we go back to this innovation driven future?

Isn't it the responsibility of a publicly chartered corporation to be responsible to all of its stakeholders not just to its stockholders?

We welcome your thoughts!

Paul Schumann & Donna Prestwood