Archive for January 2010

The Industrial Commons

January 21, 2010

Before I get started, has anyone held that Oprah is trying to copyright the term “aha moment?”  Is that true or just another urban myth?

Anyway, I recently had an “aha moment.”  But in deference to Oprah, I’ll call it my “Light bulb moment”™©.

Anyway, I’ve been really trying to get a better grasp on how education can link up with the need for highly- skilled workers that can help create a competitive regional business climate.  In some recent federal legislation, like the Perkins Career and Technical Education Act, there are extensive references to “high skill, high wage, and high demand” occupations.  High school and college CTE programs are supposed to identify these occupations and link their programs to them.  I won’t get into the vagaries of trying to figure out and apply congressional intent, but let’s just say it is much easier said than done.

Skilled Workers and Economic Drivers

I think that policymakers were ultimately grappling with a way to put the focus on education and training that will build the talent base for a region’s economic drivers to thrive.  A good working definition of an economic driver that I came across is “an industry that stimulates economic growth and creates spin-off jobs in a region.”  In other words, these are companies in a particular industry sector that generate enough profit so that that their growth ripples outward creating demand for additional jobs in that sector.  Ultimately, as the economic drivers in a region grow, they create business profits and individual prosperity that spark demand for other goods and services.

Much of education and training is focused on training for jobs in this outer circle of goods and services.   Often, these are in fact “high-wage and high-skill” jobs.  But they won’t exist for long if the core economic drivers in a region aren’t healthy.  Look at what has happened to the home construction industry.  So I’m wondering about how we get smarter in developing the talent base that directly supports our regional and national  economic drivers themselves.

The Industrial Commons

Gary Pisano and Willy Shih helped flip the switch for my “light bulb moment” as I read their essay from the July-August 2009 edition of Harvard Business Review titled “Restoring American Competitiveness.”  They explained the important concept of the “Industrial Commons.”   You can read the beginning of the article online here and purchase a reprint if you care to —  Perhaps there’s a free version floating around somewhere.

Pisano and Shih draw their concept of “the commons” from the historical example of shared lands in a town where animals belonging to people in the community would graze.  The commons didn’t belong to any one person, but was a benefit shared by all in the community.  The “Industrial Commons” refers to a foundation of knowledge and capabilities (technical, design and operational) that is shared within an industry sector, such as “R&D know-how, advanced process development and engineering skills, and manufacturing competencies related to a specific technology.”   They note that these industrial commons are still mostly geographical, because they are centered around people who move from one firm to another within a region, or who collaborate between firms in a supply chain.  They observe that during the last couple decades as U.S. firms have outsourced bits and pieces of various manufacturing and engineering sectors to low-cost developing economies, there came tipping points when the full design and manufacturing capability (the industrial commons) was lost from the U.S. and the commons essentially emigrated to another locale.  They warn that once an industrial commons is lost, it is nearly impossible to retrieve.

As an example, Pisano and Shih observe that in the Computing and Communications sector, the U.S. has already lost its capabilities in desktop, notebook and netbook PCS, low-end servers, hard disk drives, consumer-networking gear such as routers, access points, and home set-top boxes.  And the U.S. is at-risk of losing blade servers, midrange servers, mobile handsets, optical-communication components, and core network equipment.

They demonstrate that Amazon’s Kindle 2 can’t be made in the U.S.  Its flex circuit connector is made in China; its electrophoretic display is made in Taiwan; its highly polished injection-molded case is made in China; its wireless card is made in South Korea; its lithium polymer battery is made in China, and its controller board is made in China.  In every case, the specialized expertise to manufacture these parts migrated out of the U.S. at some point in the recent past.

Despite the media’s nay-saying, all is not lost.  The U.S. still has the world’s largest output of manufactured goods and there are positive signs.  But there is a real danger of losing our advanced manufacturing sectors if companies continue to outsource our industrial commons to our eager friends and competitors.

How do we stem the loss and begin to rebuild our design and manufacturing expertise?  I’ll summarize Pisano and Shih’s recommendations for government policy and corporate policy in the next blog.  I also plan to share some exciting work that is happening in Northwest Florida, linking up the education sector to that region’s industrial commons.

In the meantime, let us know if you’re seeing substantive work on linking education to the economic drivers of innovation in your region.

To the future!