X-raying the globalization of an icon

You probably recall, maybe still use, the old Sonicare electric toothbrush. It fought plaque at 32 KHz, was used by most dentists, guaranteed your money back if improvements were not obvious after 30 days of use, was bulky and all American. Chances are that even your dental hygienist would praise your toothbrushing style. At that time, Optiva, the maker of Sonicare, had a workforce of just 600 and sales of $175 million, in an all-American affair.

Fast forward to now. Five years after Optiva was acquired by Philips, Elite, scion of the old Sonicare, is becoming a global status icon. Elite is just one of the oral-care products a team of 4,500 workers of two dozen nationalities, at 12 locations and in five time zones, manufactures - this is indeed a global team. From Der Spiegel, here's the first half of the global journey of the Elite toothbrush, from spare parts to the assembly line:

The toothbrush is essentially comprised of 38 components. The parts for the energy cell, a rechargeable nickel-cadmium battery, are supplied by Japan, France and China. The circuit board, its electronic heart, comes pre-etched from Zhuhai in the Pearl River delta of southeastern China. The copper coils originate from the Chinese industrial city of Shenzhen, not far from Zhuhai. They are wound by armies of women with bandaged fingers. Globalization is largely a female phenomenon.

The 49 components on the board - transistors and resistors the size of match heads - hail from Malaysia. They are soldered and tested in Manila. Then they are flown to Snoqualmie on the West Coast of the U.S., the site of the parent plant. Meanwhile, back in Europe, the more complicated plastic parts are trucked from Klagenfurt in Austria to Bremerhaven in Germany. Klagenfurt also supplies blades made of special steel produced in Sandviken, Sweden. A freighter from Bremerhaven takes the half-finished brushes across the Atlantic to Port Elizabeth, New Jersey. From there they cross the continental United States by train. And in Snoqualmie, a 40 minute drive from Seattle, the final product is assembled and packaged.

By this time the components have traveled a full 27,880 kilometers, two thirds of the Earth's circumference.

And here's one of the current driving forces:

A worker in the US assembly team earns between $9 and $14 an hour, depending upon her position on the assembly line. A Chinese worker brings home about 1,000 renminbi a month - i.e. $120, or roughly $0.75 an hour. Just over 5 percent.

Conclusions:

1. Such redistribution of labor could explain the low inflation in the US - by keeping wages in check;
   
2. The US workforce will likely find more redress from education than from labor unions;
3. And... Today's future is in transportation.

Excuse for offshoring or call to action?

Following, there is an excerpt from a letter Craig R. Barrett, Intel's Chairman, sent to Business Week, in which he is addressing the need for corporate involvement in what, and how, the US educational system turns out specialists:

Science Grads, Where Are You?
[...] But their achievements do not tell the whole story about the American education system. The Intel STS finalists are the exception, not the rule. In fact, American K-12 students are consistently outperformed by their foreign counterparts on international math and science assessments.

ERODING RESOURCE. We also have a graduation gap: While the number of jobs requiring technical skills is increasing, fewer American students are entering -- and graduating from -- degree programs in science, math, and engineering.

Why does this matter? Science and technology are the engines of economic growth and national security in the U.S., and we are no longer producing enough qualified graduates to keep up with the demand. These graduates -- like the Intel STS students -- represent a resource vital to American competitiveness that is eroding at home while being produced more rapidly and efficiently abroad.

For the past three decades, about one-third of U.S. bachelor's degrees have been granted in science and engineering. Asian nations far outstrip that figure, with China at 59% in 2001, South Korea at 46% in 2000, and Japan at 66% in 2001.

LOSING GROUND. Of those degrees, the number awarded in engineering also varied greatly: In China engineering accounted for 65% of all science and engineering degrees; in South Korea for 58%; and in Japan for 29%. In the U.S. that figure is less than 5%.

How did we get here? A report released earlier this year by Achieve, a nonprofit organization that helps states raise academic standards, contends that we have institutionalized low performance through low expectations. Our high schools expect only a small number of students to take the advanced math and science courses such as algebra and geometry.

Another Achieve study showed that much of the math content on state high school exit exams is basic at best -- similar to material covered by foreign students in the eighth grade.

GET INVOLVED. America's economic future lies with its next generation of workers and their ability to develop new technologies and products. This means we must strengthen math and science education in the U.S.

We must increase the number of students who can compete on a global level by, for example, adopting the goal of doubling the number of engineering graduates each year from some 50,000 to 100,000 or more. This requires the support of elected officials, but changes of this scale cannot occur without action from the business community. [...]

Despite similar calls coming from other leaders in the industry, not much has happened to show greater corporate involvement into tuning up the educational system to the industry needs. To date, only IBM has announced a program whereby its elder employees, with advanced degrees in science, could opt in for early retirement on the condition they go and serve as high-school teachers. Are these initiatives enough to bring about change? Are they meant to persuade lawmakers, students and parents, or directly effect the desired change? How realistic is it to expect a solution and how that solution may look like? N.B. Industry leaders are aware of the amount of time it would take to turn things 180^o in education if we started doing things right today (~20 years).

Check out the comments!

On shareholder democracy

If aproved, the newly proposed SEC rules regarding the disclosure of executive pay will make for interesting analyses about the not so direct connection between corporate incentives and results. The Corporate Library Blog, the blog associated with The Corporate Library, brings into attention a piece by NYT's Gretchen Morgenson about shareholder democracy. The idea is that "shareholder elections are procedurally much more akin to the elections held by the Communist Party of North Korea than those held in Western democracies."

In our day and age, we almost instinctively associate (more) democracy with the idea of better in most organizations. Corporations, organizations meant to maximize profit, seem to make no exception.

One can rationalize endlessly about the level of democracy a corporation can and needs to take in. In fact there is a continuum: on the one hand we have the military (pure hierarchy and no democracy), on the other we have the individual. Such continuum makes it difficult, especially for the lawmaker, to rule on the optimum level of corporate democracy. Not to say that, in general, democracies are about legitimacy, not rational decision making...

...from the art and money virtuous cycle

Untitled—After Sam, oil painting, by NY based artist Rudolf Stingel, acquired by François Pinault, French luxury goods magnate and billionaire. This work may go on display at the Palazzo Grassi in Venice, recently bought by Mr Pinault to house his contemporary art collection. The gallery is scheduled to open in Spring 2006.

Internet(s) at crossroads

The current Internet, quintessential American contribution to the world, has become target, and possibly casualty, of those who challenge "hegemony," and support "multi-polarity," friends and foes of the U.S. alike.

Today, the Internet is ruled by Internet Corporation for Assigned Names and Numbers (ICANN). According to Webopedia, ICANN is a

nonprofit organization that has assumed the responsibility for IP address space allocation, protocol parameter assignment, domain name system management and root server system management functions previously performed under U.S. Government contract.
ICANN was created by the late Jon Postel in the fall of 1998 in response to a policy statement issued by the US Department of Commerce. This statement called for the formation of a private sector not-for-profit Internet stakeholder to administer policy for the Internet name and address system.
Thus far ICANN has taken various measures to oversee the domain-name registration system's transition from government hands to private hands and to coordinate its decentralization and the integration into a global community.
ICANN's diverse board consists of nineteen Directors, nine At-Large Directors, who serve one-year terms and will be succeeded by At-Large Directors elected by an at-large membership organization. None of the present interim directors may sit on the board once the permanent members are selected.

Gathered for the first time at the UN's World Summit on the Information Society (WSIS) in 2003 in Geneva, officials of several countries are pushing for an alternative to the current system of Internet governance--the management of the names, numbers, root servers, and standards. Brazil and South Africa are critical of the current system, China calls for a new international treaty organization. France too wants an intergovernmental approach. Things went as far as Zimbabwe's Robert Mugabe's calling the existing system of Internet governance a form of neocolonialism.

On June 2005, the efforts of several nations and organizations (e.g. U.N., E.U.), asking for a place at the Internet management table, led to a U.N. report calling not only for the US to give up control, but asking the United Nations to set broader Internet policy, including multi-lingualization of the Web and the power to tax domains to pay for universal access.

The reaction of the US government was, what Kenneth Neil Cukier calls it in the latest issue of Foreign Affairs, a Monroe Doctrine for our times: "U.S. Principles on the Internet’s Domain Name and Addressing System."

First, there are domain names, such as www.chircu.com or www.bbc.co.uk. Controlling the database of generic names ending with suffixes such as ".com," ".net," etc., as well as the designation of operators for two-letter country-code suffixes (such as ".uk," Great Britain), touch on the commercial, and respectively, political, aspects of domain names. When the U.S. Government asked ICANN to initiate the procedures leading to a new domain name for pornography Web sites, a new domain name, ".xxx," was proposed. However, following complaints from American Christian groups, the U.S. Department of Commerce removed its support for such a domain name. Moreover, when Taiwan was assigned the ".tw" suffix, under the current ICANN arrangement, China could not escalate its frustration with the event to a diplomatic scandal.

Second, there is the Internet Protocol addresses, 32-bit numeric address written as four numbers separated by period, that every Internet resource needs to work on the Internet. A crisis is already looming in this area. For historical reasons dating back in the late '70s the system is set up to accommodate about 4 billion potential IP addresses. Now, that everything needs to be on the Internet, the current IP address system needs to be updated before running out of unique IP's.

Third are what are called root servers. According to Webopedia, this is a

system of 13 file servers that are distributed around the globe and contain authoritative databases that form a master list of all top-level domain names (TLDs). There is one central, or "A", server that replicates changes to the other servers on a daily basis. Different organizations maintain the servers on the root server system.

In other words, the root servers are a control mechanism needed to make the domain name system work. For another historical reason, worldwide, there are only 13 root servers. To make matters even more delicate in a diverging world, ten of the root servers are operated from the U.S., and the rest from Holland, Sweden, and Japan.

Finally, there are technical standards that must be formalized and coordinated to ensure Internet interoperability. Standards are the engine propelling the Internet evolution.

All four Internet governance facets deal both with the politics and economics of the Internet. However, it is the fourth facet that has the greatest economical implications. For example, different standards may stop the growth of the major plumbers of the Internet, it so happens that most of them are US-based companies, while opening (smaller) worlds of opportunity to local players in, say, France, China, India, and Russia. This is not a new evolution, see the different standards in (wireless) telephony, space-based positioning systems, power grids, or even video-coding systems. The novelty here, if countries proceed with a non-US alternative to ICANN, may be in doing away with a system whose value consists of the ability one has to access data and applications from any Internet-connected device, regardless of the place where data, and applications, originate.

By mid-November 2005, WSIS will have worked on:

[...] a process of monitoring and evaluation of the progress of feasible actions laid out in the Geneva Plan and a concrete set of deliverables that must be achieved by the time the Summit meets again in Tunis in November 2005. Efforts are now being made to put the Plan of Action into motion and working groups are being set up to find solutions and reach agreements in the fields of Internet governance and financing mechanisms. These working groups will provide inputs to the second phase of WSIS in Tunis. Also, measures will be taken to bridge the digital divide and hasten the achievement of the Millennium Development Goals with the help of ICTs.

These being the facts, future scenarios about the internet(s) evolution are a necessity at places like the U.S. Government, Cisco, Juniper, Google, Yahoo, Oracle, Legend, Wipro, SAP, and so on. In addition, the U.S. Government should, and will, see what bargaining power it has left after March 2003. Even though the recent approval at UNESCO of the "Convention on the protection and promotion of the diversity of cultural expressions" doesn't give the full measure of the leverage the US Government still has in matters dealing with the Internet, it gives one no assurance for the long-term fate of the Internet.

One for you

Have you ever wondered why is it that those who say the truth around here are called comedians?

Business Responsibility vs. Business Responsibilities

Reason features an interesting 3-way conversation among Milton Friedman, Whole Foods’ John Mackey, and Cypress Semiconductor’s T.J. Rodgers: "Rethinking the Social Responsibility of Business." Departure point is a Friedman citation: The Social Responsibility of Business Is to Increase Its Profits.

John Mackey, the founder and CEO of Whole Foods, starts off by disagrying with Friedman. He believes the above citation is too narrow a description of his and many other businesses’ activities.

T.J. Rodgers, the founder and CEO of Cypress Semiconductor, counters Mackey's point(s) by arguing that corporations add far more to society by maximizing “long-term shareholder value” than they do by donating time and money to charity.


You may access the conversation at Reason online by clicking here. The first comment here is also my comment to the conversation.

Beethoven's Own Handwriting

J. WAKIN, in NYT, writes about the newest musical discovery, A Historic Discovery, in Beethoven's Own Hand

[...]

A look at the manuscript,[...], shows a composer working with abandon and fixated on getting it exactly right. Groups of measures are vigorously canceled out with crosshatches. There are smudges where Beethoven appears to have wiped away ink while it was still wet. Sections have "aus," or "out," scribbled over them.

In some parts, Beethoven pays little heed to spacing out the notes in a measure, extending the five-line staves with wobbly lines in his own hand. High notes soar above the staff. The handwriting grows agitated to match the music. His clefs are ill formed. In one place, he pastes an entire half-page over a botched section with red sealing wax.

In another spot, Beethoven puts in numbers to signify the fingering. "It's so touching," said Stephen Roe, a musicologist who is head of Sotheby's manuscript department. "It means he played it."

The manuscript is written on several different types of paper with a paper-covered board binding, apparently from the 1830's. The title has the word "fugue" misspelled as "tugue." Bound at the back is a first print edition.

The "Grosse Fuge" lies at the heart of an enduring Beethoven controversy.

It was composed, and published, as the finale of his Op. 130 String Quartet, a member of the colossal series of late quartets. But it was astonishingly complex. After the premiere on March 21, 1826, a reviewer called the music "incomprehensible, like Chinese" and suggested that Beethoven's deafness was at fault. Beethoven wrote another finale, lighter and more pastoral, and agreed to have the "Grosse Fuge" published separately.

Debate has raged over the Op. 130 quartet's proper finale. One camp says that since Beethoven himself made the decision, the substitute finale should be played. The other says that he was effectively pressured into the change by his friends and publisher, and that therefore the "Grosse Fuge" should remain.

Maynard Solomon, another Beethoven biographer, cautioned against overestimating the manuscript's value, pointing out that it is a piano transcription and thus a "secondary work." But, Mr. Solomon said, it fills a gap in the history of the "Grosse Fuge," which he called "one of the most important composition histories in Beethoven's life."

The publisher commissioned a four-hand piano version from another composer, but the job of teasing out the string lines and assigning them to the keyboard was so poorly done that Beethoven insisted on making his own version, which he delivered in August 1826. He was dead less than eight months later.

Describing the period of Beethoven's life, Mr. Lockwood, the Harvard musicologist, said: "He's sick. He is old in his way. He's tired. He's really near the end of his career. But he decides it's worth it to get this piece out in four hands in his own version. It's a labor of extreme love at the end of his life."

Beethoven could not comprehend why the work was not better received. When he was told the audience at the premiere called for encores of the middle movements, he was reported to have said: "And why didn't they encore the Fugue? That alone should have been repeated! Cattle! Asses!"