Unacceptable Face of Innovation

Unacceptable Face of InnovationRecently, I paid a courtesy visit to the News Director of a local television station.  Being gracious, he offered to show me around the facility.  We entered the main studio.  It had been a number of years since I had been in a news studio, but it looked familiar, the cameras, sets, cables and other production artifacts. I asked the News Director what was the size of the crew. He held up one finger, walked over to a computer console and told me that everything was pre- programmed by the computer. All that was needed to control the cameras and production was run by the computer. I know many studio production personnel, most have families, where are they supposed to go?

Innovation in medicine, material science and many other areas has made life better for many people. But there is another side to innovation that is rarely discussed. Many innovations are designed to be labor saving.  With the world population increasing labor saving innovation can only eventually lead to economic collapse and social unrest. Forty years ago factories teemed with workers, now like the news studio they are empty but for a few operators, maintenance workers overseeing robotic assembly.

Let us return to a time before the personal computer. Back then companies had secretaries (now called administration assistants) type using IBM typewriters. For the sake of example, imagine a company with five secretaries.  Their job was to type one hundred letters a week. When the PC came available the boss realized he did not need five secretaries to type the 500 letters. So he fired two.  Here is the problem.  The secretaries were hired to do a job, in this case, each was expected to type one hundred letters a week, when the PC was introduced the work load of the remaining three increased to 166 letters a week with no commensurate rise in pay. All the benefits went to the boss.

In the last few decades, this story in various forms has been repeated, thousands maybe millions of times.  The result has been increased inequality of incomes within society and a growing class of chronically unemployed people.  It is unacceptable. But what is the alternative?

Consider the following, another way to look at our Pre-PC story is that the introduction of the PC meant that five days of work could be done in three days.  What if the boss had said, I want to share this bonanza.  He offered his five secretaries to work for three days but get paid for four.  He still makes a greater profit as his payroll is lower. Why would he do this?  Because it creates long term economic stability, a loyal staff and a prosperous society. When the financial crisis hit in 2008, German companies took this approach. Instead of laying off workers they shortened the work week.  When the economy rebounded the workers were put back on a regular schedule.  The benefits were reaped in the first quarter of 2011 when German industries reported record profits.  What the Germans understand is that economic benefits and hardships have to be shared. They also understand that cutting jobs reduces the pool of skilled workers when it is time to expand in the future.  Germany, the Netherlands and the Scandinavian countries have the lowest income inequality, lowest unemployment, the highest rates of health, happiness and quality of life.  This is called a Stakeholder model of capitalism and it is far superior to the Anglo American shareholder model because it views innovation within a holistic societal context.

There is a choice of two paths, labor saving innovation can lead to social unrest or a social contract.  The 21st Century society should not look like a scene from ‘The Hunger Games” with a few thousand millionaires and billionaires living behind security gates and rest of the population scraping to make a living. Technological innovation should be for the benefit of the many not a route to unemployment benefits.

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Peter DoylePeter Doyle is an award winning media marketing, news and documentary producer using rich media to accelerate innovation and commercialization. Check me out at http://www.linkedin.com/in/peterjdoyle

This entry was posted in Culture & Values, Finance, Government, Innovation, Policy, Technology, The Economy and tagged , , . Bookmark the permalink.

5 Responses to Unacceptable Face of Innovation

  1. Markus Fromherz says:

    I recommend reading Martin Ford’s “The Lights in the Tunnel”, http://www.thelightsinthetunnel.com/. There are a number of other books and papers that have explored this in depth. Ford also has a detailed proposal for how to address this (essentially sharing profits through taxation and government distribution), which may be the only workable solution.

    • Peter Doyle says:

      Marcus
      Thank you for the reference. Also on the bright side a few progressive companies like Google have started changing the mindset, whereby they allow their employees to have one day a week working on their own projects. it is a start

      • Dan Templeton says:

        Dateline August 2012:
        Google is set to begin its reorganization of Motorola Mobility, the cell phone company it purchased exactly one year ago for $12.5 billion.

        In a filing with the SEC, Google said it will lay off some 4,000 workers, or 20 percent of all Motorola Mobility employees, and close a third of its offices worldwide. Google said two-thirds of the cuts at Motorola Mobility will come from foreign operations. Google expects to take a severance-related charge of up to $275 million mostly in the third quarter

        I can not believe these comments above are serious. Only efficiency improvements generate long term growth of income for the aggregate populace. In relatively short term, some people may be displaced and hurt, but in the longer term the whole ship will rise. Please also read Schumpeter.

  2. Pingback: Innovation Excellence | Innovation Quotes of the Week – August 12, 2012

  3. Peter Doyle says:

    Dan
    That sounds fine in the abstract, and maybe Schumpter was relevant in the 20th Century but the reality is, profits made by companies are NOT invested back in new jobs. Labor destroying innovation is not benefting the population at large but a few. There was a major study done recently that showed wealth does not trickle down, it floods to offshore haven. This was done by the former chief economist at McKinsey using IMF data
    http://www.guardian.co.uk/business/2012/jul/21/offshore-wealth-global-economy-tax-havens?CMP=twt_gu

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