I saw Ellen Johnson Sirleaf, co-laureate of this year’s Nobel Peace Prize in Liberia’s capital Monrovia earlier in the year at this conference on peacebuilding and statebuilding. She shares the prize with another Liberian, peace activist Leymah Gbowee, and Yemeni journalist Tawakul Karman.
The Nobel committee honoured them in recognition of what they’ve done of course, but also to draw attention to the place of women more generally in conflict and post-conflict situations. Talking to women at the Monrovia conference, I understood the reality behind the jargon I at least tended to dismiss in development reports about the need for “gender mainstreaming”.
What that means is this for instance. Your husband or son goes off, maybe for years, to fight. When he comes back, he’s psychotic, ready to kill the neighbours, or even you or the children, over some trivial disagreement. He might have become an alcoholic or a drug addict. And it’s up to you to cope. No help from the numerous programmes for disarmament, demobilisation and reintegration for former combatants.
And while the men were off fighting, women looked after not only their own homes and families, but the refugees as well. In the case of Liberia, that meant not only people fleeing the Liberian civil war, but thousands from neighbouring countries too. Again, with little or no help.
The Nobel prize draws attention to the fact that women and girls are often the main victims of war. At the start of the year, The Economist published a table showing the number of women raped during conflicts, including over 500,000 in Rwanda in 1994 and 20,000 in Bosnia in 1992-95. These figures are probably underestimates, given the lack of means to collect data and the shame and blame attached to being raped. You may remember the case of the Saudi rape victim sentenced to 200 lashes and six months in prison.
Rape and violence against women and girls aren’t the only problems peacebuilding has to tackle. Writing in The Guardian, OECD’s Donata Garrasi, Co-ordinator of the International Dialogue on Peacebuilding and Statebuilding, put it like this.
Imagine your children cannot go to school because of fear of being attacked and that the only people who’ll protect you from an armed gang are the members of another armed gang.
Imagine living in a country with a wealth of natural resources, but you are poor and unemployed.
Imagine most teachers, doctors, judges have fled the country.
Imagine your country receives lots of international assistance, but results are nowhere to be seen.
The Monrovia conference was a step towards finding the answers. Closing that meeting, Ellen Johnson Sirleaf pointed out that: “The challenges are huge, but they’re not bigger than the challenges we’ve faced in the past”.
We all agree that Steve Jobs was a marketing genius, persuading the gullible to pay extravagant prices for bright, shiny things because they’re bright and shiny. But unlike Thomas Edison, the man Jobs is often compared to, he never electrocuted an elephant. In 1903 Edison fried Topsy from Coney Island’s Luna Park and captured the event on film.
Why? Topsy had killed three men, including her abusive trainer, and was going to be executed anyway, but Edison saw a chance to score points against his rival George Westinghouse. Edison’s company was producing electricity in over a hundred power stations by the end of the 19th century, but his DC system could only supply customers within a couple of kilometres from the plant. Westinghouse’s AC system, based on Nikola Tesla’s ideas, was capable of transmitting current over hundreds of kilometres. Edison started a “war of currents” to prove that AC was too dangerous to be allowed into homes, and killing Topsy using AC current was supposed to prove this.
Topsy died in vain of course, and elephanticide hasn’t been tried as a sales technique since, although Edison did develop the electric chair. Another Edison idea that proved successful was his Menlo Park laboratory, the first industrial research lab, working on everything from the phonograph to iron ore separators. Jobs’ genius is similar to Edison’s, if on a lesser scale, in that both men recognised then potential of improving existing products and making them widely available.
Apple actually spends less of its revenue on R&D than Microsoft or Sony (4% versus 17% and 8% respectively) but it spends far more than Sony on each individual product: $78.5 million versus 11.5 million, while Microsoft spends a lot of its $9 billion research budget on general research that may not lead to a specific product.
Jobs understood that success depends on innovation, and that doesn’t mean just invention. Innovation can mean changing a product’s composition, for example removing the cocaine from Coca Cola, or the way it’s sold – in cans or bottles from machines as well as over the counter at drugstores.
Another great American entrepreneur who understood this too was Clarence Birdseye. He didn’t just invent an industrial method of copying the Inuits’ way of fast freezing fish, he also invented much of the machinery that made mass marketing of frozen products feasible. In a stroke of marketing genius, the Birdseye company supplied shops with the open-top freezer units to display and sell their products. This has since been copied by firms the world over.
Edison, Birdseye, Jobs and the like are obviously important assets for their company. But can you measure their value in the way you measure non-human capital? An OECD project on “intangible assets”, also called intellectual capital or knowledge capital, sets out to answer that question, in order to “provide structured evidence of the economic value of intangible assets as a new source of growth”.
If you’re wondering what Topsy was worth, take a look here.
Today’s post is by Andrew Sissons, from the Work Foundation in the UK. His research focuses on the key sources of growth and new jobs in manufacturing, business services and the digital economy. Andrew will be discussing future of manufacturing in a service economy on October 4that the Northern Ireland Economic Conference.
The financial crisis has left behind many lessons for developed economies. Among the most widely accepted is the need for advanced economies to re-balance towards manufacturing and other export-intensive activities, reversing decades of relative decline in manufacturing.
At times, the arguments in favour of manufacturing have taken on a moral character. We are often told that we need to get back to “making things”, replacing the dangerous alchemy of financial services with good, honest graft. This type of hand-wringing is not especially helpful, especially in a modern, diverse economy. Manufacturing is not important because it involves making things, but because it is highly export-intensive, innovative and productive (three things that all advanced economies desperately need at a time like this).
But there is another problem with characterising manufacturing as being about just “making things”: in short, it isn’t. Modern manufacturing is an incredibly complex industry, which includes a wide range of different activities, from design and development to marketing and after-sales care. The Work Foundation’s report More than making things argued that much of the future growth in manufacturing will come from “manu-services”, which involves combining advanced manufacturing with a range of different services.
This might sound far-fetched, but it is part of a trend that has been underway for years. In the UK, just 42% of manufacturing jobs are in production occupations; the rest are in service-related and professional roles. Ground-breaking research from Prof. Andy Neely suggested that almost 60% of US manufacturers now consider themselves to be manu-service firms, selling a combination of goods and services.
So what do these mysterious manu-services actually involve? While the answer seems straightforward – anything which combines manufacturing and services – in reality this encompasses a lot of different trends. Some manu-services involve designing bespoke products around the customer’s needs, so that neither buyer nor seller know what it will look like when they sign the contract (for instance, a defence firm might develop an advanced new system in this way). Others involve selling long-term service contracts, with maintenance and after-sales care guaranteed along with the product (the Rolls-Royce “power by the hour” model is the most famous example of this).
What matters is not which services are provided, but how they benefit the customer. For manufacturers, manu-services is not just a new market; it involves switching to an entirely new business model. Companies no longer sell goods – they sell whole packages, to provide experiences, outcomes or solutions. They develop lasting relationships with their customers, rather than relying on a series of one-off transactions. That means that they have a range of new ways to innovate and differentiate themselves; not only can they develop better and cheaper goods, they can also improve the services they offer.
In fact, we believe that manu-services have replaced “high-tech” manufacturing as the key source of potential comparative advantage for manufacturers within an increasingly competitive global economy. Many emerging economies are expanding rapidly into high-tech manufacturing – defined rather arbitrarily by the proportion of their turnover that companies spend on R&D – while some developed countries – especially Britain – are seeing their high-tech manufacturing base contract faster than low-tech manufacturing. By contrast, manu-services are hard to deliver, and therefore harder to copy. If a country can build up expertise in manu-services, it is likely to be able to hold on to it.
But all this integration of manufacturing and services, and the switch to a radically different business model, is not easy for companies to achieve. Neely’s research suggests that manu-service firms are less profitable, and more likely to go bust than “pure” manufacturers. And as it turns out, it is the biggest firms that appear to struggle most with the switch to manu-services. This is unexpected – you’d expect the most innovative firms to be most profitable – and it isn’t exactly clear what causes it. It may be due to the challenges of coordinating many different service activities, or the initial costs involved in changing business models. But whatever the causes, it is in our interest to help companies overcome these problems.
And this is where government policy comes in. We set out a range of measures that government can put in place to support manu-service companies, above and beyond the policies required to support manufacturing in general. We believe that governments should consider introducing Centres of Excellence for new business models, so that companies can benefit from the latest academic thinking. We’d like to see manu-service firms have access to advice, finance and insurance to help them cope with the extra risks involved in manu-services. We also need a skills agenda that provides graduates with a mix of engineering and business skills. But most of all, we need governments to take manu-services seriously, and embed it at the heart of their economic policies. At present, it is almost impossible to define and measure manu-services, let alone promote its growth.