I am presenting excerpts from an interview, which I just watched of a video on the Internet between Andy Grove (former CEO and founder of Intel Corporation, the largest manufacturer of microchips in the world) andCharlie Rose. It struck me as I watched the interview that many of Mr.Grove’s comments, even though they are focused on the microelectronics and medical industries, might have important applications to the architectural profession. Mr. Grove observes in his interview that many information technology companies find themselves facing changes from old ways of doing business. New rules apply, and no one necessarily knows what the new rules are until the critical time to be affected by those rules is already amongst us or that time has already passed.
One way companies can defend themselves in these circumstances is to put themselves in the positions of helping their industries define what those new rules are. Some of the things that can be done are to make dramatic pricing moves, technological moves, and mergers with companies, whose DNA hopefully might thrive in the new rules.
Companies who thrived under the old rules can be threatened and possibly even destroyed by the new rules. It is crucial for companies to know what businesses they are in, and then concentrate on obtaining and maintaining world-class proficiency in those businesses, so that whatever new rules might apply, those businesses might benefit or at least not be hurt or destroyed. This would require all other activities of those businesses to be selected for delegation to outside contractors, i.e. subcontracting or outsourcing or given up to other companies entirely.
Sometimes under the old rules, one category of companies would thrive in a particular segment of business activity only to face multiple categories of businesses competing in that activity under the new rules. Sometimes that category becomes merged with numerous additional categories. Companies, which can begin to compete in more of the applicable categories under the new rules, can get an edge on the competition. The speed of development of the technology of one kind as compared to the speed of development of the technology of another kind depends on how fast companies can learn from one experiment and turn around and apply it to another experiment.
Grove calls this experimentation process “information turns”. If a company can do two experiments in a month as opposed to doing just one then it is going to eventually benefit from those experiments twice as fast. Information turning rates and learning rates must get faster and faster in order to keep up with the changing rules. He states that the medical industry as an example has not been and mostly continues not to be concerned with enough experimentation to increase the speed of distributing and collecting information about patients quickly, seamlessly, effortlessly and at low cost. The medical industry has not and does not spend the required significant amounts of money to develop techniques, which would allow it to learn from those experiments. Why not? Well, he says, it’s hard work. It’s not glamorous to do the grunt work of experimentation, to try and fail and to try again and to fail again and again and again until some useful and noteworthy benefits are the results. Like the medical industry’s lack of patient information sharing, the architectural profession, shunning or ignoring experimentation, is prototypically caught up in doing most of its work by rote, that is, doing the same things over and over and over again without much if any thought given as to whether that work could be done better via experimentation. Some tools are already there, simply waiting to be used. Some tools need to be developed.
Either way experimentation is the key. Currently, Mr. Grove states that there is no incentive in the medical industry (architectural profession) to conduct serious experimentation. Significant money is needed to do significant experimentation. One of the key benefits of experimentation is to figure out ways to get, collect and distribute larger and larger amounts of information in usable format instantaneously so that it can be productively used. The medical industry (architectural profession) could adopt the model of the financial industry, whereby information is instantaneously made available worldwide for individual transactions anywhere and between anyone.
The ability to make this information available across many computer platforms in many languages, representing many companies, techniques and individuals might be referred to as a sort of Rosetta stone of translation. The reason it is taking so long for this information to be disseminated are twofold: economics and comprehension of benefits. Mr. Grove asks us to assume that everyone associated with the medical industry (architectural profession) would realize beyond any shadow of a doubt that instantaneous sharing of information is a good thing. But then chop up all of this valuable information into tens of thousands of individual companies, each containing its own block of information, so that it becomes so fragmented that no one can get a proportional benefit of the information, which has been put there. The medical industry (architectural profession) as a whole might end up having access, but no individual company would receive direct proportional benefits. What needs to happen is to motivate enough technology players and government players to adopt a bonehead simple approach where the investment is so small that the medical industry (architectural profession) will make that investment in order to keep up with the new rules. It can probably be done, but it would be inelegant. It would not be able to do all of the wonderful things that could possibly be done. It would only accomplish the basics and could potentially be employed across the country in a year. Mr. Grove also states that we have not seen this happen yet, probably because we are shooting too high.
Our ambitions are too great, and consequently the expense is too much. It would cost the equivalent of a war to put in a complex system. Are we ready to start the economic burden of another war to do this? No. Instead, we implement a system, which is so simple that everyone will hide his/her head in shame, because it is so simple, but for the same reason it is so simple it is cheap and fast. We get used to seeing the benefit of it and then there is a whole lifetime to add to it and improve on it, but we get started. Mr. Grove also addressed the loss of a global competitive edge by the US. The US may not be in a position to use its creativity and entrepreneurship to compete in the way we have in the past. The US is unlikely to find some new disruptive technology, which will once again swing the pendulum our way, to give us an ability to maintain our leadership.
Mr. Grove said that he thinks we will still find many disruptive technologies, but that the equivalent players in China and India will also find disruptive technologies. What if they find and develop these disruptive technologies for a lot less money per person per invention per doctor per architect or engineer than we do? If the disruptive technologies we find are about equal to those found in countries like China and India, then the consequence of the competition between these disruptive technologies will be deterioration in US wage rates, because we cannot indefinitely sustain 5 to 1 or 8 to 1 wage rate ratios, where there are no other considerations to do so. Mr. Grove states that there is nothing that can really be done about these circumstances. It is a mathematical inevitability. He says that this is not pessimism. It is the simple reality. There is not going to be an escape. Distances are disappearing. We have to earn our deferential standard of living. Mr. Grove states that he thinks globalization will finish off America as a manufacturing giant. American knowledge workers will be turned into a simple global commodity. This is a scary proposition. Maybe it will scare us into doing something about it, which hopefully might give us enough higher productivity so that we can still justify higher wages.