Youth unemployment skyrocketing during the iPhone era

If we live in an era when incredibly rapid technological change is actually changing everything, how come large parts of the EU are facing sustained economic crisis? How come nationalism, xenophobia and racism is spreading throughout Europe when advances in information technology ought to have us set on a path towards a better and wealthier society?

I admit that I find myself nodding my head when I read economist Paul Krugmans column “The Big Meh” where he concludes that the hype of the technological revolution that we’re experiencing is bigger than the impact it is making on society. If everything really was new and different, then there would be a net result in factors that really matter, such as youth unemployment rates and general welfare.

A disturbing reality is that advances in information technology so far has failed to translate into increased productivity for society as a whole. Krugman points to this. The manufacturing sector saw great productivity increases during the 1990’s and early 2000’s but is now back on low levels characteristic for the 1970’s and 1980’s.  For a minority of the workforce the last decades may have been one of a sense of great progress, but for the many there has been status quo or little economic progress.

We may be carrying a world of information in our pockets, but how does this progress in information technology translate to progress in the physical world? Or  more drastically stated, how can having a Twitter account and owning an iPhone get you a job if you lack the right qualifications and live outside one of the great economic hot-spots? They can’t, of course. But it points to the problem, that much of the progress that we experience in information technology has not translated into productivity, jobs and welfare. For example, youth unemployment in the EU has been skyrocketing during the whole iPhone era, which has been a decade of economic crisis.

Youth unemployment rates, EU-28 and EA-18, seasonally adjusted, January 2000 – March 2015. Source: Eurostat.

Swedish general unemployment rates may not be particularly high from an EU perspective sitting around 7-8 percent, but still high from a traditional Swedish perspective. The high youth unemployment rates is a long term challenge to society that must be dealt with. But as long as productivity increases are stuck on today’s low levels this will be a challenge, to say the least. There is a lot of talk about education and matching nowadays, a consequence of a growing concern that a large fraction of the workforce is considered unskilled or unqualified for the requirements of the job market. If this fraction continues to increase, I fear there will be no end to the growing sense of crisis and blaming on scapegoats that drive nationalism, xenophobia and political extremism that we see in Europe today.

There is almost certainly not one single big solution that will be the fix of everything, but on the other hand there is no point in resigning. For myself, I have as late as today been involved in discussions regarding summer jobs for students, social enterprises and how public procurement policies influence the market for small businesses. There are many small things that can be done on a local scale that can have a big impact on individual people’s lives. But very little of this is related to rapid technology transformation or anything with even a vague resemblance to something like a “new economy”.

Innovation policy: Too much focus on research and education, and too little on business?

Swedish startups are not growing as they should, hold too few patents, and too many successful startups leave the country, writes Peter Jörgenssen, former Swedish technical attaché in California. No wonder, replies two professors, Alexandra Waluszewski and Håkan Håkansson, who argue that the concept of innovation is poorly understood and that politicians spend to much tax money on research and education and too little on stimulating the business climate for startups.

So what’s the problem? Sweden usually ends up as number one, two or three in international rankings of innovation climate and Swedish companies earn big incomes from licensing their patents internationally. Also, government spending to promote innovation increased by more than a third during the last decade, while other OECD countries lowered their spendings. At first it seems that the future looks bright for Swedish innovation and competitiveness.

However, there are dark clouds on the horizon. First, young startups grow slower and hold a lower share of the patents compared to many other countries. Second, and troublesome from a Swedish perspective is that many successful startups move abroad. And third, the metrics used by the EU to measure innovativeness may be flawed, failing to account for market and business perspective.

The Swedish market is small, with a shortage of investors, and taxes may be unfavorable for growing high tech companies. Most disturbing though, according to Jörgensen, is that the debate regarding these issues is more or less nonexistent and that there are no recent studies on why startups move abroad to such a great extent.

Waluszewski and Håkansson think that Swedish innovation policies overlook the difficulties of industrializing and putting potential innovations on the market. Even worse, they argue, is that the very concept of innovation has been skewed to only focus on developing products and services and disregard that the very definition of innovation require that the product or service also must reach widespread use on the market.

And the skewed definition of innovation may even have gained hold in the EU. The two professors point out that the EU-comission’s way to measure innovativeness focus too much on government and corporate spendings on education, research and development activities, and very little if at all on how well these activities are converted to commercial use.

And when growing startups move abroad in order to find the right financing and industrial partners, they take the potential new jobs that are created with them.

The conclusion is that if Sweden, or any other nation want to remain competitive it is necessary to pay more attention to how to create markets, financial incentives and industrial structures that stimulate growing startups to stay.


Managing variability key to making Product Development ”Lean”

The idea that product development can be made ”lean” using tools from the lean manufacturing toolbox caught on long ago. You may have heard about corporate war-rooms jammed with visual displays showing progress on scorecards while meeting attendants are forced to stand as the team leader makes it through the standardized meeting procedure in 15 minutes sharp.

In that context, ”leanness” is interpreted as how to organize daily work to (in some respect) become as efficient as possible. The interesting question is, will this really make a company more innovative and help to create better products at lower cost?

When I read the book “The principles of product development flow”, by Donald Reinertsen (2009), I get the impression that nothing says so.

Instead, I’m struck by how poorly the essence of ”leanness” is understood, leading to companies adopting practices that may in fact be counterproductive rather than helpful.

The key word in product development is variability. In manufacturing, it is usually desirable to minimize variability, but in product development it is variation that creates value.

Product development is different from manufacturing, says Reinertsen, because, as soon as you target non–trivial development tasks, they will contain a degree of risk that introduces variation. You cannot eliminate this resulting variability, because economic rewards in product development are linked to taking accounted risks. You add no value whatsoever if you develop the same design twice.

So if you want to manage product development more efficiently, it comes down to managing variability. And then, the regular treats from the lean toolbox won’t work, because their fundamental approach is to eliminate variability. And when you do, you remove everything that is new, innovative and value-creating in your product.

It would be very interesting to hear real life stories from companies that practice some sort of lean product development. Is lean product development in practice targeting meeting efficiency, standardization and variability reduction, or do real companies  acknowledge that variation and risk are essential parts of the value-creation process that must be managed, not eliminated?

Manufacturology Restart!

Enjoying on my old iPad model 1 back in December 2010.
Enjoying on my old iPad model 1 back in December 2010.

I started the blog Manufacturology on January 13 2010. I then published more than one hundred posts during the following two years. Some were just curious comments on events that I found interesting, others were serious in-depth articles going into subjects such as lean production, manufacturing strategy, strategic capabilities and 3D printing. I quit writing in 2012 and since then the blog has been resting while I’ve been doing other stuff. But now it’s time again! Manufacturology is making a restart, and I will do my best to fill it with all things worth reading related to making, innovation and manufacturing — and more.

I thought the old Manufacturology was reasonably successful, attracting a fair number of visitors, albeit nowhere near the popularity of really successful blogs. Below is a post that I published on the site’s one-year birthday January 13 2011. I am republishing it again just to revive old memories and to provide a link to the past. It used to contain links to the posts that I was mentioning, but since they are no longer active I’ve removed them.

Manufacturology turns one year

Originally published by J. Storck on January 13 2011

Manufacturology turns one year today. During that time I’ve had 13000 page views, which translates to somewhat fewer individual visitors since some view multiple pages.

My first post, which was simply called “Welcome”, was published on January 13 2010. When I started out I had the idea and ambition to focus solely on production research. As it turned out, I have been writing about a quite broad range of topics, including lean production, manufacturing strategy and strategic innovation. I participated in the Four Stone Hearth blog carnival with a post about ironmaking in a bloomery furnace. I also published some opinions on books that I read during the year, for example “Smile or die” by Barbara Ehrenreich, “The principles of product development flow” by Donald Reinertsen, and “Let my people go surfing” by Yvon Chouinard.

One post attracted far more visitors than any one else. It was called “Ash cloud over Europe” and for some reason it made it to the front page of the Huffington Post‘s European news section. The Huffington Post is a leading American news site, and my post attracted 933 visitors during the day it was published and only slightly lower numbers during the days that followed. It has now attracted more than 3500 visitors in total. For some reason my post bubbled up through the media alarm to the top of a leading news site, there is no logical explanation but happened by chance.

I continue to write, although maybe less focused on manufacturing and industry, and more towards society at large. I’ve considered changing the blog language to Swedish, but so far I continue to write in English. Hope you enjoy it and that you drop by here every once in a while. See you around!

Of course, my goal now is to make the new Manufacturology an even more interesting and frequented blog than it used to be. And yes, I will keep writing in English since after all quite a few people actually live outside the borders of Sweden. It will take some hard work, but will also mean a lot of fun. So, welcome to the new Manufacturology blog! Who knows where we will be in one year from today, in May 2016?

And, as I said back in 2011, I hope to see you around!

Joakim Storck

Joakim Storck April 2015
Dr. Joakim Storck, April 2015