Tag: engineer

As the World Churns:

The cost of placing an employee approaches 30% of that employee’s salary. In fact, most head hunters charge roughly 30% of the employee’s salary to find the right person to fill the job opening for a client company. Sometimes the employee is recruited from a competitor causing a net productivity loss in a market due to disruption or “churning”.

The company also has a choice of hiring with the internal HR department. In this case, they are paying HR personnel to place ads, review resumes, check references, and conduct interviews. These costs can also run into a substantial percentage of the new employee’s salary. From previous articles, The Ingenesist Project suggests that these methods may not even result in the best employee selection:

The Unnecessary Market Friction

Text only Résumé is no longer adequate in our complex business environment due to subjectivity, semantic inconsistency, and the time and resources required for fully interpreting the content. The cost of delivering a résumé has been decreased by computers and the Internet while the cost of reviewing the résumé has remained constant. Keyword search programs often eliminate excellent and creative candidates based on criteria not related to the candidate. Managers tend to hire what reminds them of themselves – from world that no longer exists.

Estimated wasted productivity:

Suppose that 50 Million professionals; doctors, lawyers, engineers, professors, administrators, managers, and directors are employed in the United States. Suppose that the average salary is 70,000 per year. Suppose that they change jobs 3 times in their career and that the cost of placement is 30% of salary, or $21,000 dollars per placement.

The total cost is $ 1 Trillion dollars multiplied by 3 placements in a career equals nearly 3 Trillion Dollars. Now, divide this by 30 years in a career and we can see that 100 Billion dollars worth of human productivity are spent every year not necessarily matching the most worthy employee to the most worthy employer. This does not include moving expenses, salary increases, disruption costs, or inflation.

The probabilistic electronic résumé system

The Ingenesist Project specifies a vetted knowledge inventory that resides in Social Media. The knowledge inventory, probabilistic electronic résumé system, and innovation bank together would make the paper and language Résumé obsolete. The percentile search engine would scan the knowledge inventory of the corporation and scan the knowledge inventory of the labor market and seek matches with high probability of increasing net productivity – not unlike Amazon.com predicts what book you would like to read next.

Options, options, give the market its options

election criteria can be adapted to reflect social priority such as reduced traffic congestion or to reflect strategic objectives such as incremental or blue sky innovation requirements. Trades across companies and industries can occur opportunistically not unlike interdepartmental transfers or even like trades in professional sports are conducted today.

Companies can manage peaks and valleys in employment by trading across diverse industries. avoiding layoffs all together. Employees that can stay productive in diverse industries transfer new ideas and discover transferrable efficiencies. Experience gained would be added to the knowledge inventory to enhance the probabilistic résumé inventory available for continuous improvement and tangential applications of innovation enterprise.

A virtuous circle? … A 3 Trillion Dollar opportunity nonetheless.

Social Clipping and the Amazing Disappearing Economy

By Admin

On January 14, 2009

In General Information

In the early 1990’s, the NAFTA Mutual Recognition Document (MRD) for engineering professionals was the first modern attempt to treat knowledge like a financial instrument. Unfortunately it failed because of a tiny little flaw that I call ‘social clipping’.

Most trade agreements that followed were modeled after NAFTA and, as such, inherited the clipping flaw. The flaw is that ‘products’, but not the knowledge assets that created them, are mobile in a global economy.

The MRD handed the knowledge economy to Mexico on a silver platter; but they turned it down. The government did not want to give their engineers “wings” because they were afraid that they would fly away. Instead, Mexico chose to sell their extraordinary young engineering talent off cheap to meet quotas promised to Asian, European, and American companies to relocate huge manufacturing plants to the country. Today, Mexico competes with China in a race to the bottom of a manufacturing economy and almost no indigenous design industries.

Two-way street:

Back then, the protesters raged about an influx of cheap foreign engineers to the US. But many US engineers saw that Mexico needed everything that engineers make – roads, bridges, infrastructure, etc. The needs were endless and the objective was clear; to increase human productivity in Mexico was to create real and sustainable wealth. Maybe then, the citizens would not need to fly away.

These infrastructure projects could have been funded because the Professional Engineering License behaves like a financial instrument mitigating project risks (so that nothing “disappears”). Only then banks would lend and insurers would insure. The transfer of knowledge and accountability to Mexico would have been extraordinary; the relationships, profound; their development progress, astonishing.

The Disappearing Economy

But the MRD died by clipping. Mexican Engineers would have been required to take the same engineering examinations as US engineer. The government refused citing concern that they could not pass. So, in 1994-1997, this author directed a large comparative education project sending over 250 engineers to the US professional engineering examination (EIT). The Mexican Pass rate was extraordinary – they were easily comparable to the US pass rate in most subjects and flat-out superior in mathematics. There was nothing wrong with Mexican engineers, or the culture; there was something wrong with the financial system that keeps them invisible.

Knowledge is Power

As the story goes, Mexico has a family oriented culture where hierarchy is often based on seniority; a common examination may favor recent graduates. It would be inappropriate for a young engineer to have authority over a more senior engineer. Dig a little deeper and the real problem was power. In Mexico, power is concentrated among very few people. It would have been unacceptable for transparency to exist.

We are facing a similar situation in America today. Power has been steadily consolidating over the years. A huge and fast stimulus package will enter a financial system with a shortage of vetting institutions. There is a strong pull toward ‘business as usual’ – creating J-O-B-S; not necessarily more entrepreneurs, engineers, or mentors, and certainly not empowering whistle blowers. In the knowledge economy, Americans salaries are pegged to off-shore outsourcing. This is a game that we can no longer win playing by the rules.

Social clipping

As we have seen with less developed nations; when people are held below a certain economic level, they fail to organize for innovation, social change, entrepreneurship, and value creation because they are too busy trying to pay off debt and feed their families. Social capital, creative capital, and intellectual capital are muted; that’s when the magic of innovation disappears. That’s social clipping.

America must move on to the next level of economic growth. The Innovation economy is a game we can win playing by new rules. Government must trust the people, empower social media, and not clip our wings with an outdated economic model.

Factors of Production for an Innovation Economy

By Admin

On December 2, 2008

In General Information

Many years ago, economists in the midst of the industrial revolution identified three variables (productive inputs) for building industries; Land, Labor, and Capital. The rate of output was related to how these inputs were allocated. If any of these factors of production were missing, the other two had little use. The concept of Land, Labor, and Capital is still the foundation of much of today’s economic thought.

We know that in the knowledge economy, the location of knowledge work is highly mobile – so “Land” does not have the same significance for making things as it did 100-200 years ago.

What about “Labor“? Knowledge workers analyze situations, manage many variables, and create unique solutions. They do not really produce identical knowledge pieces like a machine operator or a production worker –so Labor also means something different than a century ago.

The term “Capital” refers to money that would be needed now to build future structures, buy machines and to pay wages. Today money buys access to information, education, and knowledge workers. So we see that many old economic principle may not be as applicable in the new economies.

The factors of production for the Innovation Economy are Intellectual Capital (also call Human Capital), Social Capital, and Creative Capital + entrepreneurs. (Reference: Jane Jacobs, Robert Putnam, Richard Florida)

Intellectual Capital Model suggests that concentrations of educated and motivated people attract investors to employ them and invest in the communities where they reside. This investment attracts other intelligent people who in turn attract more investment thereby creating a cycle of economic growth

The Social Capital Model suggests that people acting in communities can create better solutions, greater accountability, and more economic growth than management, governments, or bureaucracy can induce on their own. Examples of Social Capital include Civil Rights Movement, community watch organizations, Democratic Government, and recently, Social Networking.

The Creative Capital Model, suggests that engineers and scientists think more like artists and musicians than like production workers – their ideas come 24/7/365 – and that an environment of tolerance, diversity, and openness promotes creative output.

Silicon Mouse trap

Many people argue that Silicon Valley, in fact, was created and sustained by a perfect storm of Social Capital, Creative Capital, an Intellectual Capital + Entrepreneurs. Other countries have tried to duplicate Silicon Valley but most have fallen short – if any of these factors of production are missing, the other two have limited utility for production of innovation. To demonstrate how these productive inputs might appear in an innovation economy, consider the following example:

Suppose that we take 5 mechanical engineers and lock them in a room with instructions to build a better mouse trap, they’ll emerge with a better shingle, a better spring, a better whacker, and a better trigger – but not necessarily a better mousetrap. Suppose that we now put a dog catcher, an engineer, a plastics manufacturer, an artist, and the mother of 4 rowdy children together with the same task. We can be quite certain that innovation will occur. They may actually come up with an excellent mouse trap.

The Innovation Economy

Innovation Economics will bring the factors of production together in diverse combination rather than similar combination. In an Innovation Economy, the “secret sauce” for the production of innovation becomes far more valuable than any single innovation itself. The secret sauce provides a monopoly on dynamic repeatability rather than a static device.

As such, technologies can be open sourced and innovation crowd sourced across a much wider domain of possible user applications. Such conditions will change the type of innovations that are favored to reflect the broad and sweeping social priorities rather than innovations that are easy to patent, protect, and monopolize.

Tag: engineer

Social Media Staffing: $3 Trillion Opportunity

Social Clipping and the Amazing Disappearing Economy

Factors of Production for an Innovation Economy

Silicon Mouse trap

The Innovation Economy