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December 2012

The Middle-Skills Gap

Another fascinating article in the December 2012 issue of HBR (besides the one on Kiva Systems, which I described in my previous post) is Who can fix the middle-skills gap? whose focus is the “acute shortage of trained people to fill millions of openings for technical jobs.”

The authors (two professors of management at MIT and the senior vice president for lifelong learning at Rutgers University) argue that forward-looking local initiatives exhibit at least one of the following attributes:

  1. cooperation between multiple employers in the region or industry sector and with educational institutions,
  2. opportunities to apply classroom concepts in actual or simulated work settings,
  3. a focus on training for a career pathway, not just skills for the initial job.

They provide detailed guidelines for program models, with a review of apprenticeships and other union-employer programs as well as sector-based regional initiatives and higher-education consortia with strong industry ties, spanning community colleges, internships and cooperative education, as well as online education.

The issue in making these ideas a reality will be to find advocates with the will and the acumen to bring business leaders and university administrators together and negotiate the multi-pronged partnerships described in the article. The region that can implement successfully such programs will benefit from an enormous advantage in positioning itself as a vibrant economic area producing workers highly in demand.

What the country needs now is a group of individual government champions held accountable to create such consortia – instead of vague groups of shifting or unclear leadership supposed to help somehow, or money incentives thrown at the problem. Then maybe we’ll see on a large scale the sort of collaborative approach that has the potential of strengthening US competitiveness and reducing income disparity.

Kiva Systems

I enjoyed the article “Kiva the Disrupter” in the December 2012 issue of Harvard Business Review, which offered a great example of disruptive innovation in engineering. The company Kiva Systems has fundamentally altered “how consumer orders are picked and packed in warehouses” by making robots bring items from shelves to workers packing orders, instead of forcing workers to walk back and forth through the warehouse aisles. The first-person account of Kiva’s business challenges and ultimate success makes for a riveting read.

Here are a few things that caught my attention:

  • VCs were remarkably unenthusiastic about the hardware part of the business, because it “required a potentially substantial – and, [VCs] thought, risky – investment in engineering and manufacturing hardware.”
  • Implementing an “industry-defying approach” requires many, many calls to very sceptical possible customers arguing “this can’t be done” or protesting that, as the author was told once, “what you’re asking me to undergo is like a heart-lung transplant for my fulfilment center.”
  • It is critical to relieve customers of risk to facilitate adoption. Kiva’s simple system of three fixed-fee invoices guaranteed that customers wouldn’t be charged cost overruns or change-order fees. They also had “right of return for a full refund at any point up to final acceptance.”
  • “Designing, manufacturing and delivering all aspects of the solution” made a significant difference in implementing “a pricing approach that shifted much of the risk to Kiva.” It also allowed Kiva to offer rapid deployment capabilities where the system is installed quickly in any warehouse setting, and can be transferred easily to another warehouse.
  • Kiva covered every system of the customer experience, which enabled continuous improvement: “Because our system is based on software, it will keep getting better with each new release, thanks to improved workflows and algorithms.”

IEEE Spectrum has posted a fascinating demo of Kiva robots at work on YouTube. Kiva was ultimately acquired by Amazon in May 2012 for $775 million.

Baxter the Robot

I recently had the good fortune of attending a talk given by MIT Professor Emeritus Rodney Brooks, who - after a distinguished career as both an academic and an entrepreneur - has now become an entrepreneur full time in order to create and commercialize intelligent robots that adapt to their environments.

Brooks is best known by the general public (at least the part of the general public interested in engineering innovations) for being the co-founder and Chief Technology Officer of iRobot, to which we owe the home vacuum cleaner Roomba as well as autonomous robots used by the military, such as the SUGV, and others. During his talk he regaled us with "tales from the trenches", for instance:

  • His team determined that a potential customer would be able to purchase the Roomba for at most $200 (at the time) without double-checking with her spouse first, and the whole design of the Roomba followed from that price constraint. Brooks said that a European competitor, which had designed a robot vacuum cleaner first, has yet to enter the American market due to the significant difference in price between both products, although the latest, most sophisticated version of the Roomba now sells for $700 (according to the iRobot website).
  • Brooks also mentioned that iRobot had a product superior to its competitor's for use by the military in one of its campaigns abroad (I don't remember if it was Iraq or Afghanistan), but the company realized that the end users - young soldiers - far preferred the other product because of its simpler interface, and as a result they were not taking full advantage of the iRobot product's capabilities. The company therefore redesigned the product interface to make it more similar to that of a video game, and the soldiers were then able to use many more of the product's features.

Brooks is now the chairman and Chief Technology Officer of Rethink Robotics (formerly Heartland Robotics) where his team has created the robot Baxter, which has the potential of profoundly changing manufacturing. This is because the robots currently in use cannot work side by side with humans and are very expensive and inflexible. Programming such robots takes a long time (several weeks, I think, because it needs to be done by the manufacturer) and thus robots currently in use have not been relevant to nimble companies producing small batch orders.

In contrast, Baxter has been built in such a way that it can adapt to its environment and does not need extensive prior training in order to be operated safely. The Rethink Robotics website touts Baxter as "America's first adaptive manufacturing robot", and you can find a detailed list of "why Baxter is different" here.

This new generation of robots has attracted growing attention in the press, both in print and in blog posts. For instance, the New Yorker has a blog post up on "Why making robots is so darn hard". Baxter itself is the focus of an excellent and thorough IEEE Spectrum article: "How Rethink Robotics built its new Baxter robot worker" (subtitle: "Rodney Brooks's new start-up wants to spark a factory revolution with a low-cost, user-friendly robot".)

The company has so far attracted $62 million in funding and Baxter is now about to ship. As the IEEE Spectrum article points out, "Baxter may not be superfast, superstrong, or superprecise like other industrial robots, but it’s smarter. It uses vision to locate and grasp objects, and you can program the robot to perform a new task simply by holding its arms and moving them to the desired position. Baxter will even nod its head to let you know it has understood you."

The article also does a very good job of explaining Baxter's key selling points: safety of use in an environment with human workers nearby (something that I was surprised to learn is not possible with present-day robots), ease of use and cost: "just $22,000", as opposed to hundreds of thousands of dollars.

Brooks is confident that Baxter will sell well after the necessary ramp-up period, in particular because he believes outsourcing manufacturing to the country that happens to be cheapest at the moment is not sustainable, since labor costs in that country inevitably increase with time.

The manufacturing jobs that left the US decades ago are not about to return (or at least they won't be performed by humans), but hopefully keeping manufacturing capabilities in the US will promote different types of manufacturing jobs that will foster continued US competitiveness and innovation.

A quick demo posted on YouTube, although not as fascinating or extensive as the video Brooks showed during the talk I attended, offers a good overview of what makes Baxter so different from earlier generations of machines. Expect to see more of Baxter as Rethink Robotics's customers take delivery of their new robot worker.

The New Where and How of Innovation

Today’s (short) post is about two articles in the September 2012 issue of Harvard Business Review. The first one, “The New Corporate Garage”, discusses the places “where today’s most innovative – and world-changing – thinking is taking place”. The main argument of that article is that we have entered innovation’s fourth era, after the eras of (1) the lone inventor, (2) corporate labs and (3) venture-capital-backed startups. In this new era, the author states, “the scale of a big company can unleash innovation” thanks to “passionate, entrepreneurial catalysts who use corporations’ global infrastructure, brand reputation, partner relationships, process excellence and other capabilities to develop solutions to global challenges in ways that few others can.”

The article provides the following examples:

  • Medtronic’s Healthy Heart for All
  • Unilever’s Water Purification
  • Syngenta’s Productive Farming
  • IBM’s Smarter Cities.

These companies “mixed the entrepreneurial approach of a third-era VC-backed start-up with the unique capabilities once housed in second-era corporate labs” and leveraged their advantages to achieve results start-ups would be hard-pressed to replicate. The author is careful to emphasize these successes would not have been possible without corporate catalysts, “those mission-driven leaders who corral corporate resources that are outside their traditional span of control to address sprawling challenges.”

Another interesting article in the same HBR issue was “Are you solving the right problem?” with the subtitle “Most firms aren’t, and that undermines their innovation efforts.” I particularly liked that article because it is based on a framework developed by InnoCentive, the online innovation marketplace, and uses concrete examples of how well-defined problems have led to once-elusive solutions, for instance:

  • cleaning the 1989 Exxon Valdez spill in spite of the low temperatures (which hindered traditional pumping) by framing the problem as one of “materials viscosity”,  
  • identifying the stage and progression of the disease in any patient by using a noninvasive biomarker, instead of trying flat-out to cure ALS (Lou Gehrig’s disease),
  • predicting solar flares with better accuracy by recasting the problem as a data-driven and forecasting challenge, which led to a solution by a semi-retired engineer whose model provided 85% accuracy with an 8-hour lead time (instead of 50% and 4 hours in the previous NASA model).