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The Technology Machine

How Manufacturing Will Work in the Year 2020

About The Book

How will autonomous agents, emergent systems, and chaos theory change the way we live and work in the twenty-first century? As today's manufacturing and production systems grow increasingly complex, tomorrow's science of complexity will produce paradoxically simple solutions, argue technology experts Patricia Moody and Richard Morley in this astonishing vision of the year 2020.

Containing both cutting-edge insights and simple truths that provide a roadmap to the future of business -- and illustrated by case examples from such companies as Motorola, Honda, GM, Solectron, Intel, Silicon Graphics, Modicon, Flavors, NeXT, Japanese Railway, and Andover Controls -- The Technology Machine challenges readers to understand the spirit and core drivers of growth: technology, knowledge, and individual excellence.

By combining rigorous research with their extensive experience with technology advances that have changed industry, Moody and Morley are able to supply simple guidelines for future growth and detail their keen vision of future systems, leaders, and workers. They isolate the three bad business habits at the root of manufacturing problems today -- shortsightedness, restrictive structures, and unbalanced improvement fads -- show how to break them, and supply four infallible predictors of the types of breakthrough technologies that will come to dominate the world of the future. In that world, customers and suppliers are linked by real-time, online systems; business is driven by customer-designed, point-of-consumption replication of product; and a wide gap grows between "The Island of Excellence" organization of the future -- with its holistic approach, including two-year apprenticeships, uniforms, and morning exercises -- and "The Others," the non-elite, sweatshop-like, breakeven companies of the past. The book is eloquent, original, and essential reading for managers in every area of business and industry.


Chapter One: How Manufacturing Will Work

Chaos, Pain, and Transformation

When Francis Cabot Lowell, through a supreme act of industrial espionage, memorized the guts of the English power loom systems he had seen in 1811 on an extended stay in Great Britain, he launched a two-hundred-year run for American manufacturing. Lowell pulled together all the disparate functions of the textile production process -- carding, dyeing, spinning, weaving, bleaching, tasks that had been contracted out to rural farmwives and small shops -- and arranged them in sequence in a single site, a new four-story mill on the banks of the Charles River in Waltham, Massachusetts, the prototype for thousands of factories that followed. The first experiment was successful beyond the incorporators' dreams, a money machine; 200 percent profits fueled more and bigger mills -- Lowell, Lawrence, Lynn, and Manchester, New Hampshire's Amoskeag complex, the biggest cotton plant in the world -- more innovation, and urban communities of mill workers. The golden era for manufacturing had begun.

A Dedication to Bricks and Mortar

But process innovation and dedication to scale did not come without some pain. Complete vertical integration of the textile process led to captive company workers, Taylorism, piece rates, and huge profits. The brief utopian era of the mill girls -- educated Yankee farm girls who left the countryside for an average of two years' work in the mill city of Lowell, where they attended concerts and lectures and shopped for machine-made items -- gave way within less than ten years to cheaper immigrant labor. And within fifty years, the promise of complete vertical integration of the textile process had led to strikes and work stoppages, lung diseases, disinvestment in machinery, and a litany of excess and inflexible profit production whose aftereffects have lingered long beyond their usefulness.

Technology Overtakes Manufacturing

Manufacturing progress has always been limited by technology and human factors -- availability, training, wages -- but we must learn to apply the two main components of every production system, machines and people, in different ways. In the coming decades, manufacturing professionals will be technology partners, rather than servants to machines. The future isn't about bigness, or powerfulness, or economies of scale. It's about smartness, values, supreme technical mastery, and constant innovation: the Technology Machine.

Most of us survived the hard marches through the computer crusades of the seventies, the eighties' lighthearted flirtations with excellence overlaid on rigid hierarchies, and the nineties' over-the-hill-but-can't-quite-see-the-bottom struggle toward an enlightened industrial enterprise.

"Leading edge" in the nineties was about people, systems, and communications. Companies like USX that grew successful by building bigger operations had to learn to think small and light (Nucor's electric-fired mini-mills, for example); they needed to reach outside their walls to find suitable teammates (Japanese steel producers, for example). Still, it wasn't enough.

Manufacturing excellence alone will not carry good companies into the next millennium. Simple manufacturing excellence has become, as has quality, merely the ticket to the big leagues. What does this mean for manufacturing pioneers and survivors right now?

Transformation in the Nineties

The nineties will be known as the decade that witnessed final dissolution of all entities we grew up with -- our churches, schools, families, government, businesses, health-care systems, music, maybe even our tax and currency systems. The bad news is that this unraveling will continue, but the good news is -- for only another four or five years. Manufacturing professionals should expect to feel great discomfort, many surprises, big highs and lows, and confusion, and to be generally "off balance." Coping skills and pharmaceutical solutions -- Prozac, stress-reduction clinics, and natural mood levelers -- will be perfected and stretched to their limits.

Recovery from Chaos and Pain

We want to put the pieces back in order again. We refuse to continue in this uncomfortable, "disorganized" state, so it seems only reasonable, and painfully natural, that we will reassemble the pieces. The glorious product -- for a few companies -- will be a true re-formation, a rebuilding into new entities.

And, as usual, business -- not government or education -- will lead the way, because it is those of us in business who are responsible for designing, making, and shipping things, who need effective structure to live.

It is a dangerous time. With the stock market soaring and lurching uncertainly, many companies feel that they have already been reengineered, empowered, and reborn. Why change, why anticipate the difficulty of any more distractions from returning to the happy business of being successful? Why now?

Lotus, Bowmar, Apple, DEC, Data General, Apollo, NeXT, USX (formerly USSteel), NCR (National Cash Register), General Motors -- the long line of at one time equally happy, busy, and successful companies stretches across a landscape we all occupy. We're stepping around the detritus. Each of these companies made one or two strategic errors -- perhaps depending on proprietary software or sloppy manufacturing, or not listening to customers. And each failed to recognize and anticipate, and to be ready for big technology swings.

Motorola's Six Sigma initiative, for example, and the Baldrige Award have led many lesser organizations to attempt excellence. But in fifteen years, the long line of troubled corporate contenders will lengthen to include companies that only concentrated on manufacturing excellence, that only perfected that slim area of opportunity, production. It's not enough.

The Next Frontier

The biggest areas of opportunity lie ahead of and after manufacturing (see Figure 1.1 on the next page). Look at the areas that feed and draw on the manufacturing function -- all the places where idea transfer and development barriers stand in the way of ultimate customer fulfillment. These circuit breakers include traditional purchasing, MIS, order administration, accounting, middle management, senior management, possibly human resources, logistics, trucking, warehousing, design, design engineering, perhaps manufacturing engineering, returns, customer service, quality control, even teams -- all areas where time is used up with no payback. And these waste areas lie especially thick at the second, third, and fourth tiers of the extended enterprise; the small- and medium-sized producers are one level -- but a world away -- from final assembly operations.

Just as Motorola proved that quality is a given, that you can't even be in the game with less than Six Sigma quality, so must we accept the inevitability of lean, perfect, agile, laboratory-like manufacturing processes. We already know how to do this. We know how to lay out efficient lines, how and when to introduce automation, and in what degree. We know how to select and develop and train and motivate our workforce. And we know how to measure -- boy, do we ever measure! Any number you want, we've got.

The Last Frontier

Manufacturing, as this linear representation of the process from request to shipment shows, is the thinnest slice of the process, because in the past twenty years smart managers have taken much waste and labor out of the process. Indeed, the current focus on lean manufacturing is an obsession to drive waste and layers of complexity out of manufacturing, to strip it down to its bare essential processes for what is to come, apparently leaving few opportunities now for tweaking.

Further adding to the integration challenge is the fact that as manufacturing grew from Lowell's semi-automated textile mills, to Intel's clean room, robotic plants, various separate management areas -- especially engineering, supply management, and production -- developed their own noncommunicating systems, philosophies, metrics, and even career paths. These pieces will need to be reintegrated into a technologically complete process -- not eliminated. They offer wide-open and unique opportunities for innovation and custom, intelligent solutions that manufacturing innovators have not developed. In the 2020 enterprise, such functions as order administration, product development, and cash farming will blur into a single order communication process. Every bit of information that can be maintained for correct billing and product specification will be transmitted electronically in parallel to actual material processing. In effect, the opportunity time line will compress into a single input and output flow circuit diagram. With no more linear systems flows, the computer that moves the intelligence becomes transparent -- what remains is innovation in design and clean, fast replication.

What we don't have across our industrial landscape -- including and especially along the extended value chain -- is consistent, predictable, integrated easy excellence. That's where the Technology Machine takes its rightful, advantageous place among the winners, carrying them to unthinkably high levels of performance, at unimaginably low costs.

Excellence must characterize every member of the entire value chain in metrics like 10X, a time-to-market improvement objective that drives organizations, particularly electronics, to develop and launch new products the way that grocers handle fruit that has a shelf life of three days, and Six Sigma quality. Look to the second, the third, and even the fourth tier for enterprise excellence in different technology areas.

Does that mean that customers must certify, "Baldrige," or otherwise demand excellence out of their excellence partners? No, because we do not have time to wait for the inevitable result of that approach. It means, as our friends at Honda say, "Go to the spot." Take excellence on-site.

Excellence in the Year 2020

Let's extend our definition of excellence to enterprise excellence. Concentrate on the front end of the system -- design and procurement, logistics, packaging, and customer service. These are the areas where the Technology Machine will take huge chunks of time and money out of the system, where it will make the biggest impact on product design and introduction, and where product design will become customer design.

Islands of Excellence

In the year 2020 there will be two types of enterprises: the Island of Excellence, and all the rest. The Island of Excellence organization will do many things extremely well -- manufacturing, real-time customer design of product and simultaneous production, or customer fulfillment. The workforce on the Island will be very special -- specially selected, trained, motivated, and aware of their position as an elite corps. The organization at the Island will be deceptively simple -- a lot happens with few ripples on the water, quietly and smoothly.

You might notice that things are in balance -- functions that were, in previous decades, functionally siloed all seem blurred, or integrated, into a smooth flowing unit.

And the people are different. Diversity is not an issue. Although we see both sexes and many racial and ethnic "colors," the overall pattern of the fabric of this organization -- a well-selected, well-constructed, and simply laid-out quilt -- is one of integration. From not too great a distance all personal differences blend into the overall design.

We do not see plaques bearing plastic corporate mission statements here. Instead, each inhabitant of the Island will have experienced a holistic, two-year apprenticeship program -- where they learn to live the mission -- for it would be a mistake to expect new members to find themselves quickly in this simple, but strong culture. People need time to adapt, and the security of knowing that they are trusted and expected to behave appropriately.

And what of the spirit? Well, it's reassuring to know that the generation that followed self-indulgent Boomers and Generation X -- the Reformation Generation -- has returned to basic values. This generation will have none of their parents' irresponsible neglect of the whole human entity -- mind, heart, soul, as well as intelligence. The distinguishing characteristic of working on -- rather being a member of -- the Island is its integration of spiritual energy with physical and mental capabilities.

Inhabitants of the Island wear uniforms. The first fifteen minutes of each day are spent in light exercise, a form of Tai Chi. Sometimes associates sing or participate in an island-wide assembly. Many workers are engineers and many are "technicians," but all have an integrated, common vision of how their daily work fits into the Island's business. The icons and the myths of the building of the Island are well-known to all -- for each trainee hears the stories and repeats the words and legends of the founders, who are soft-spoken, wise, and ethical.

Associates of the Island stay connected in various ways, for many years. Indeed, workers, once accepted, are encouraged to rotate into a few pivotal positions. Discipline and termination mean exclusion from the Island. And what could be worse than being cast off to feed with the Others?

The Others

Let's look at the nonelite group. A "Mad Max" bunch, these guys make things, all right -- commodities of little intelligence, twisted metal components, flashlight switches, broiler pans, vinyl dog collars, and an occasional custom cable order. These workers have an edge to them -- their skin shows the pock-marked and fluorescent-lighted reflection of days, years, decades spent in a war zone. They twitch, they scramble, they kick and stumble; periodically their eyes recapture a common focus -- teams/quality/certifications/quality/communications/productivity. But it all passes, worn down by a lurching, erratic corporate attention span that makes attention deficit disorder look like the company's single unifying theme.

Take your choice -- The Island of Excellence, or The Others.

2020, The Vision

The challenge is to form a new enterprise vision for the entire extended enterprise, one that is technology-based and driven. Your most difficult job, however, will be to define and prepare for the human role. That vision reaches beyond manufacturing excellence into three key areas -- value-chain excellence, organizational excellence, and the knowledge worker. The challenge -- to re-form an extended enterprise, encompassing second-, third-, and fourth-tier producers -- will require many hands, but one mind. For all these challenges, the Technology Machine provides the muscle and the brains.

Value-Chain Management

Partnering? An overused word. Supply chain? Too mechanical. The virtual corporation? Smoke and mirrors. Value chain? Yes, that may be as close as we can get now, but in MMXX there will be islands, archipelagoes, and networks of excellence.

The Language of the Extended Value Chain

When GM's Jack Smith addressed the Stanford Manufacturing Conference, there was irony in his talk, not in what he said -- improved financials -- but in what he did not say. The conference theme was partnering. Smith spoke only indirectly about partnering and demonstrated exactly why our sleeping giants cannot take places in the MMXX lineup. Where in our current system of financial metrics do we read "Return on Partnering," or "The Total Accumulated Value of the Extended Enterprise," or "Return on Innovation"? In a company that values single-entity performance -- stock prices, for example -- this long-term measure is missing. A few enlightened enterprises --

Motorola did once -- have broader vision, if not the metrics to support it. "These enlightened few" recognize that astigmatic attention to a single, narrow area of performance, or dependence on size to win, or more of the same, even a proliferation of supplier awards and Baldrige applications, is not enough.

2020, The Value-Chain Vision

By the year 2020, the Island of Excellence Enterprise Partners will have achieved excellence in customer fulfillment. They will have created a perfectly balanced, socially integrated entity that translates customer ideas or wishes instantaneously into perfect product. The Enterprise Partners will conduct their transactions ethically, profitably, and in a way that protects the common good.

This vision will be outlined and supported by excellent communications.

The value chain will be driven by simplicity. The vision will be mirrored in many forms of partnerships, the ligaments of the Island of Excellence's extended enterprise body. It will be stretched and extended to include all the "last frontier" opportunity areas around manufacturing, the spots where customer fulfillment happens -- design, logistics, and procurement.

In 2020, the value-chain vision will have achieved the re-formation in which simple, elegant systems will ensure integrated data channels and rigorous information transfer throughout the value chain. The wish of Gene Richter, former HP procurement head, now IBM purchasing chief, for a buyer at every engineer/designer's elbow will be realized. Second-, and possibly third- and fourth-tier suppliers will continuously run to customer demand data. Simple visual systems will overlay hard numbers ("hernia reports"). The Technology Machine, centered on autonomous agents and complex adaptive systems software, will replace and augment complex current user protocols, such as top-down driven software and central planning cycles.

Supplier development will be a corporate dictum. Dave Nelson, head of John Deere's worldwide supply management organization and former head of Honda's award-winning purchasing program, feels that this supplier development approach, and others, such as Chrysler's SCORE, set the pace for preparing suppliers and customers to meet all their demanding customer needs. By 2020, supplier excellence will have exceeded big original equipment manufacturers' capabilities, but at this point, progress is erratic and scattered, so much so that Nelson asks, "If supplier development programs like BP have such great value in monetary payback, as well as long-term relationships, why don't North American companies rush to implement them?"

Value-Chain Excellence Models

No companies now perform all the best value-chain practices. Some, like AST, have pioneered systems; some people development; some supplier development; and some, like Lexmark, the printer producer that survived and built a new business based on an IBM castoff, have attacked development in commodity markets.

But many companies continue to struggle with the arrangement of people -- focusing on where in-plants (supplier representatives stationed on-site with customers) work, for instance, rather than on what they do. They worry about what percent of travel works best and how many hours of training keep an employee alive and productive. However, in the re-formation of the value chain, we can look to a few excellence models. Although these pioneers use approaches that are not universally applicable -- one size does not fit all -- they tend to be geared to work at all levels of their enterprise. In 2020, everything you do to achieve the 2020 vision must advance the entire enterprise; anything less will leave you standing alone -- brilliant, fortunate, but limited, and in a Darwinian sense, doomed.

Visionary Leaders

The 2020 vision is being created by visionary leaders who stepped out of line, bringing a mirrored organization with them. The best technology companies reflect the best wisdom, ethics, and management styles of their heads. Their best leaders -- the Galvins, Packards, Olsens, and Jobses, created a culture that outlived their own individual usefulness. Certainly Nypro, for example, would be only in the plastics business, not in the customer fulfillment business, without chief executive Gordon Lankton. Likewise, the personas of Motorola's Bob Galvin, DEC's Ken Olsen, and Al Decker of Black and Decker permeate their corporate cultures long after their daily involvement has passed.

This short list of visionary leaders is a source of selective inspiration. They are not perfect beings, but they share huge strength and forcefulness: Ken Iverson, chairman of Nucor Steel, a technologist who changed the way steel is made and launched a new technology from a single German electric furnace that archrival USX soon co-opted; Gordon Lankton, Nypro, an engineer who understood how to use real-time in-line process control to make very high-quality plastics, and changed and recast the plastics industry; William Hobart, Hobart Brothers, Troy, Ohio, a giant who continues to be enthusastically supportive of workforce improvement from the ground up; Gregg Ekberg, president of Highline Controls, an engineer/entrepreneur who sees beyond the physics of an engineering problem to big business solutions; Gene Kirila, president and founder of Pyramid Systems, Greenville, Pennsylvania, another unique and energized entrepreneur who creates technology solutions where none existed before; Milt Gregory, president of Gregory Associates in Santa Clara, California, another pioneering technologist who understood how to put competing customers under a single roof, and how to give them expert, outsourced design help.

2020 Metrics

Jack Stack of Springfield Manufacturing, author Richard Schonberger, Tom Johnson, author of Relevance Regained, and many small companies have developed new metrics to track performance. Developing the right metrics to perfect the process continues to be one of technology managers' biggest challenges -- too much data, and the system overwhelms the human mind; too little data, and human intervention destroys the systems. Shewhart Award winner Dorian Shainin's recommendation is to "let the data lead you" -- first learn the process and its expected performance parameters, then follow the exception signals to perform midcourse corrections. The implications of this measured approach are that in the year 2020 there will be fewer measurement systems and disputes as technology innovators run to real-time feedback and control systems. Decision parameters will constantly adjust for changes, and pioneers will be more concerned with the direction of process performance -- capability bandwidths, for example -- than absolute, digital single-point metrics. Remember, the vision requires simple systems, some trust, and predictive performance. The Technology Machine will move us toward fewer numbers understood simultaneously by more people at all levels of the value chain.

2020 Organization

The world is getting smaller...but it is not

coming together. We are all participants in an

unprecedented political and economic happening,

but we cannot make sense of it.

-- Richard J. Barnet, Global Dreams
(Touchstone, 1994)

Within another year or two, companies will have tired of the "teams fad" that proposes a one-size-fits-all process for human asset management. Sun Hydraulics, a Sarasota, Florida-based innovation leader in hydraulic valve technology whose human resource policies are remarkably progressive, even iconoclastic, refuses to use the "T" (teams) word! Instead, founder Ed Koski focuses on the Technology. Koski, an engineer/visionary, understands the value of individual, expert contributions and supremely agile information systems, above the structure associates use to work together.

Within another five years, a half-dozen of our better companies will have found a comfortable level of teaming and partnering, along with strong technical grounding with all associates. These innovators will look very different from our transitional organizational structures.

By the year 2020, in advanced enterprises, functional lines will have blurred and been redrawn, especially among design, supply management, replication (production), and traditional engineering functions. One associate (the title/work description most likely to replace our complex job grading systems), with a simple intelligent systems "associate," will perform customer fulfillment; in some Islands of Excellence, customers will replicate their own custom designs, specifically in clothing, recreational, entertainment, and communications products. Intelligent systems will supplement the combination of human management decision-making and fragmented software hierarchies and individual tools that we use now to run manufacturing. One aspect of intelligent systems, autonomous agents, can take very complex problems and allow distributed decision-making to dominate over rule-based approaches.

Autonomous Agents in 2020

You are a passenger in a Boston Yellow Cab cruising Logan Airport at 7:00 p.m. Friday, looking to pick up one last fare before heading home. Your driver, a part-time bricklayer from Southie, fills the time waiting to move with "colah-ful" comments on local heroes -- the Kennedys, a "tattuh'd sorry group," and the Red Sox, the eternal clutchers. You begin to wonder, in between stories, how this shuttle runs its pickup schedule. In 1965, an operations research model would have cranked Eniac-sized chunks of traffic pattern history, queue times, gas prices, baggage load, air traffic patterns, and dozens of other variables into a complex, long-running algorithm. But you smell the scent of simplicity here in this cab game, a real-time autonomous agent, running lean and light, always moving, no two jobs the same. This cab's driver maintains constant input-output communications as he moves. There is no central all-knowing dispatcher back at Central. The cabbie runs his own show. He is an autonomous agent, empowered with the independence and information he needs to make sensible decisions that keep the meter running. His limits run to the airport and downtown Boston and selected suburbs. Running to a traditional bucket-driven schedule, a schedule centrally derived and managed, with all its accompanying change-order headaches, would put him out of the Boston Cab business, right into the unemployment line.

You have just experienced an autonomous agent, simply served by a two-way radio and a supreme knowledge of the Boston back streets, two simple tools to get him through the day. The 2020 manufacturing/design/procurement specialist must be as fast, smart, and flexible as a Boston cabbie.

A word of caution: We are not calling for an extended enterprise replacement for the old vertically integrated organization, complete with hierarchically driven planning cycles and top-down thinking. And we are not describing a warm, fuzzy business unit whose happy workers empower themselves, however slowly, into "the right decision"! Everyone and no one is the boss, flextime rules, and we enjoy endless attention to individual foibles. Time and patience -- and the world market -- preclude this self-serving fantasy.

This Utopia, like most, won't be warm and fuzzy. The era of American-led rugged individualism will give way to an ethic that protects the common good, what Thomas Jefferson called the common weal, as well as that of the individual.

The winning organization will be smaller, but more like a SWAT team fed by common and very movable production resources, all members of the Technology Machine. Of course the workforce will be empowered and self-managed, a complete understatement considering the high level of training and technical skills and the speed of market shifts that they must pursue. In some electronics industries the perfect analogy for this structure is the police scanner -- tuned in, filtering noise, always processing, and absolutely always on the prowl.

It is now clear that by 2020 traditional hierarchies or fragmented, loosely woven, ragged companies -- independent operators not aligned for the common good or optimization of profits, false partners -- will not be able to mobilize quickly to capture, defend, or move markets. IBM learned this. The first Gulf War (1984), in which massive troop and materiel movement -- speed and mass -- won over localized advantage, and current military simulation initiatives confirm it.

The Work of the New Organization

When new organizations and enterprises form, new leaders appear. How will today's innovators become tomorrow's enterprise leaders?

They must first find the structure because it is the infrastructure that counts. The systems integration of all single-point technology -- single innovation breakthroughs, like those of Francis Cabot Lowell, Henry Ford, the Duryea brothers, Frederick Taylor, the Gilbreths (using film for motion studies to study motion and time) -- must be connected to build waste-cutting industrial machines. These early innovators' desire for double- and triple-digit profits drove the scale of their enterprises exponentially upward. Later, immigrant labor, which reached a peak in the United States around 1917, fueled the Technology Machine. In the United States, unlimited resources and a pre-income tax economic climate fueled big dreams and big profits. The organizational structure that led to incremental technologies building exponential profit machines will change.

In 2020 the organizational structure will resemble a multilayer printed circuit board, whose success hinges on those critical contact points, or Touchpoints® between organizations or partners, where information transfer occurs. A good circuit is a combination of smart design and perfect deposition -- too much or too little solder and the circuit is broken or unreliable. Manufacturing's job between now and 2020 is to build good circuits (organizations) and make their connections perfect (the extended enterprise). Technology provides the board, the current, and the chips. Further, we must pack more capabilities and even open slots into smaller units. Each component -- each associate and his accompanying intelligent system "associate" -- will be better and better prepared.

The image of manufacturing as an electronic circuit implies a vast network of independent, sometimes connected, sometimes circling, sometimes re-forming enterprises like what we see from X-ray astronomy of the galaxies. Suns form and burn out, taking their planets with them, or sometimes they in turn spin out new formations. The customer will be the sun and your partners' orbits will maintain perfect alignment for as long as they feel drawn to you.

Compensation and Reward Systems

Since the late eighties compensation and reward schemes have become more complicated, to achieve complete accuracy and fairness and to stimulate more than simple production requirements among a diverse workforce. Further, before companies began experiments with teams, group compensation tended to fall into the categories of either Improshare or executive profit-sharing schemes. Little had been done to dismantle primitive piece-rate systems that arose during the Taylorist era. Where piece-rate systems may have produced volume at the expense of quality and flexibility, systems of the nineties are intended to reward team goals, skills acquisition, and various short-term objectives. But companies that have attempted to build reward schemes based only on monetary rewards have found severe limitations on their plans for workforce flexibility and growth. New technologies don't introduce well if the organization is solidified around an outdated compensation and recognition system.

The Rewards of Human Development

In the year 2020 your company, one of the Islands of Excellence, will want to reward some workers for patient and deliberate skills acquisition in a number of complex and challenging areas -- languages, design and database use, simulators, partnering and cross-enterprise communications skills, as well as specific and changeable technology-driven knowledge. Less tangible requirements in the year MMXX, such as loyalty and demonstrated dedication to the team, will offer managers, of whom there will be far fewer, fuzzier compensation elements to factor into the formula. You should assume that most 2020 companies will be inhabited by knowledge workers, many of whom will carry no title or very descriptive, long technical strings of portfolioed capabilities, for example:

Simulation-expert, Web Master, high-level manufacturing/sourcing professional, trained physicist, Master's degree in computer science Red Team: five-year Island technical SWAT team, rotations completed to Level 5, trilingual, Canadian-born, technical/analyst, pro league shortstop, relief pitcher

Excessive Environmental Noise

Sounds excessive? That's the transition calling, sounding every one of its message-relayed, unfiltered communications capabilities. But by the year 2020, your enterprise will have discovered how to reconstruct the old hierarchies, allowing the best of the knowledge workers to emerge. Further, if you are aware, you will understand that these technologists will not believe that they work for you. They will be members of the corporation, or the network, but they will know they are technology drivers above all -- not servants of accounting, or finance, or purchasing.

Knowledge workers will occupy very special homes on the Island of Excellence, the new world of work. People with these hard skills and supportive "ergonomic" behaviors will be found on the Island. The Others, the inhabitants of what we nicknamed the Territories of Mad Max, may talk like them, or try to look like them, or even produce mass entertainment vehicles -- sound chips, movie cubes, files, paper -- that simulate the knowledge worker's workday and his tools, but they aren't the "real thing." Without the basic skills and brilliant innovators, this packaged world becomes merely a reflection -- for entertainment value only -- of the exciting world of the knowledge worker. They will only come deceptively close to capturing the technology processes that create wealth and growth.

Ideas Become the Knowledge Worker's Currency

Robert Reich calls knowledge workers "symbolic analysts." He describes them as brokers, or traders of ideas. His long list of jobs includes, with some paraphrasing, research scientists, design engineers, software engineers, civil engineers, biotech engineers, sound engineers, public-relations folk, financial banks, transactors, lawyers, real-estate traders/developers, some accountants, management consultants, energy consultants, agricultural consultants, MIS gurus and specialists, organizational development specialists, headhunters, systems analysts, film people of all varieties, writers, publishers in all forms, editors, and poets.

What are the most common words running through this list? Engineers, consultants, or designers, fixers, talkers, and traders.

When I started out, they paid me for what I did.

Then they started writing checks for what I said.

Finally I got paid for what I thought.

-- Romey Everdell, senior vice-president

(retired), Rath & Strong, and the father of Master scheduling

Ideas Will Be Your Currency -- Time Your Only Copyright!

Ideas will be your currency. You will shift, sell, hoard, hammer, share, and steal ideas. You will attempt to protect new ideas -- new data pathways, for example, or niche manufacturing tricks -- with intellectual property laws, but there will not be enough intellectual property lawyers, or enough court clerks to file and protect your claims to IP ownership. The best guarantee of intellectual property protection -- retaining "ownership" and control of your idea currency -- comes not from the courts, but from successful domination of markets and enterprises, faster, faster, and yet faster.

In the era of the Technology Machine, time will be your only copyright, along with your strong, shared ethical values on the Island -- such characteristics as loyalty, trust, honesty, and devotion to the group will reappear as approved traits.

Knowledge Worker Models: Found One!

Friday, 10:00 p.m., in a shuttle headed to San Francisco Airport. Most folks have already kicked back a beer and are dissolving into the weekend, a long commute, and dozens of unanswered voice-mail exchanges left in the ozone. A young man gets into the van, mumbles his airline destination, and pulls out a cell phone. Chattering away in Japanese, he punches in three or four calls in a row -- occasional electronic English jargon slips through. Finally, the driver asks him to keep the beeps down -- a traffic distraction -- and she asks what we all want to know. Who is he and what is he doing?

His name is Clark. He is a semiconductor trader, a young American engineer, raised in Ohio, who spent two years in Japan, has a Japanese wife, and is on his way to a morning in Boston, followed by his return to the West Coast and Singapore the day after. Last week he hit four cities. He's armed with all the expected tools -- laptop, cell phone, scanner -- totally digitized. The only missing pieces are two Pratt & Whitney engines nailed to his Nikes! Clark is not rich. We picked him up at an "OK" apartment complex, not Palo Alto or a mountaintop lair. But he's it. A knowledge worker for the nineties. What he's missing is more of a lock on the Island (he travels too much and forgets where he is sometimes, another symptom of the transition), and some idea of his ethical or cultural bent (for he does have one, even if it's not as immediately visible as a white uniform).

We know that your current, transitional knowledge worker is a victim of the information age, looking forward to retirement, to "shutting off the bubble machine." The real challenge is to describe the skill set, the goals, recognition, and reward for the world of Mr. Clark in 2020. Today's knowledge workers tend to be overworked and misused, riding out the uncomfortable transition from the Machine Age to the Island of Excellence.

Remember the vision of the Island we presented several pages back. At this point we can declare that many "siloed" functions have blurred -- procurement, design, production, and customer fulfillment -- driven into alignment and reformation by technologies that remove the interdepartmental function barriers and create a smooth flow. The worker profile, therefore, will be someone comfortable with many functions, someone capable of satisfying occasionally conflicting objectives.

Found Another One...

This plastics producer roams the second tier, competing with hundreds of other Big Three auto component suppliers. Privately held, quick to latch on to technology boosts, loaded with over thirty suites of various CAD/CAM design systems, this company shows facets of the 2020 knowledge-worker environment. Upstairs, in a glass-walled room, sit clusters of blue-blinking terminals, wheeled racks of thick component sourcing books, and very quiet engineers barely moving as they flash from one screen to another, to phones and teleconferencing hookups. One in particular, Glenn, a twenty-seven-year-old veteran of both Rockwell and TRW, now happily progressed to the second tier, looks intriguing.

Sitting on Glenn's desk are the usual two terminals -- one large display for 3-D design work, one for data transfer and review. Glenn explains how his Katia connection allows him to tie in to the Big Three platform team; he points to a pile of engineering drawings in process and a stack of printouts relegated to a box under the desk. But in between the two terminals sits an opened box of Pentel colored pencils, sharpened and laid in correct color sequence in a fold-back cardboard holder.

Engineering Transitions

What Glenn does is bridge the gap between the stylists -- the supreme gurus of auto design, who work with paper, pencils, and clay and create a gorgeously saleable design -- which is then hand-carried to other engineers, who measure, transfer, modify, and generally nudge this creation closer to manufacturability. The stylists and the engineers don't talk. Politically they are separate; they speak different languages, use different tools, and worship different gods. And the serial nature of the process, combined with repeated setup times and measurements, accumulates the months into years. Small wonder it takes Chrysler, one of the fastest platform innovators, years and hundreds of engineers to produce a new design.

But Glenn, a transitional knowledge worker, has bridged the two worlds -- one serial, politically captive, lumbering, and frequently crisis-driven; the other creative, and isolated from the production and sourcing processes.

So we have just added another line item to the knowledge worker's job profile -- cultural bridger, communicator, translator, integrator, artist.

The Appearance of Ethics

The fourth character trait of a knowledge worker is an ethical approach to work transactions. Ethics, the value set that truly dictates our business interactions, will be more important as we become more dependent on partnering, and interenterprise activities. A person's reputation -- whether "his word" means anything, and other "fuzzy" characteristics -- will travel with his technical portfolio, and it will determine not just with whom and how he forms alliances, but also where he lives and where he works.

In supply management, for example, it's clear that "ethical purchasing" is a code phrase for practices to be avoided -- gifting, special favors, and so forth. But ethical transactions in 2020 extend beyond issues of business etiquette to technology management and group loyalty.

Each of these organizations has created a new organizational structure, as well as supplying innovative and advanced approaches to its market. Sun Hydraulics, for example, a precision hydraulic valve equipment producer, has no organizational charts and never uses the "T" (team) word. Pasadena Design Studio, another home to somewhat iconoclastic designers and engineers, has the key to redesigning the auto design process itself. NeXT, Steve Jobs's expensive, but doomed, black-box computer company, proved that extremely high-quality, automated assembly processes could become "the machine that makes the machine." And Story's Boatyard, a two-hundred-year-old shipyard in Essex, Massachusetts, with a history of wooden boat production, through its careful protection of generations of wisdom about the magic of boatbuilding, is rediscovering ways to produce long-lost indigenous coastal designs with modern materials.

The Integration/Specialization Dilemma

But how many skills can a knowledge worker accumulate in one portfolio? Or how many tasks can a multitasking professional deploy? In the year 2020 electronics suppliers, for example, will lead an enterprise serving primarily information/entertainment products. This task, therefore, will not require its front-line customer fulfillment teams to be proficient at mini-mill steel processing, but they must understand how their second- and third-tier associates select those sources, and what drivers affect mini-mill markets, and where the technology is headed.

Eventually human resource management may catch up with these evolving job descriptions, but the best 2020 organizational design model will come from current best practice models laid on the enterprise product objectives. Expect that most technology workers will be engineers or technicians; their personal assistants may be digital (such as expert systems) or "humanoid," such as writers, researchers, and commodity experts. Workers will be good talkers and writers and superb presenters, skills that already put talented engineers among the elite. Their rewards will be reasonable financial security, benefits, and the ability to partner with "the best" internally and externally.


Prediction is a lot like physics. We can predict the future with 80 percent accuracy, provided we don't give a time scale on the predicted events. But if we try to establish the time scale, although we are inaccurate with the events, we will be correct in saying that there will be changes every day of every year. Stretching our vision to the manufacturing landscape twenty years out, we offer a vision of the manufacturing world in 2020, a world sharply divided between the successful technology-driven enterprises and the Others. Manufacturing processes will resemble laboratory-like environments -- clean, quiet, and smaller -- that turn out machine-made products in great variety. Autos, clothing, appliances, electronics, pharmaceuticals, chemicals, plastics -- all these very different products will be designed off-site, perhaps even by the customer, and produced in small, fast replication centers.

The portrait of the knowledge worker is very important here, because rather than offer an impossibly high-tech vision of a future devoid of humans, isolated in an asphalt landscape, we predict that the way the manufacturing enterprise is organized, and the managers who run it, will be remarkably different from even the best groups of the nineties. We know that the changes experienced by manufacturing as it learns to produce more goods in fewer sites will be mirrored by similar changes in the landscape around it -- ethics, education, factory villages, work habits, and the preparation of the knowledge worker and the technology king. In the best of enterprises, the human element will be protected and in control; in the worst, Mad Max will reign. Stretch your vision to the manufacturing world twenty years out. Come see what your home, your school, and your factory will look like.

Copyright © 1999 by Patricia E. Moody and Richard E. Morley

Reading Group Guide

Discussion Group Questions
1. There will be winners and losers in manufacturing in the year 2020. Many companies that exist today won't make it, starting with automotive and electronics firms. Talk about it.
2. The dream of the extended enterprise is now thwarted by software system limitations -- there is not much good software available at reasonable prices for off the shelf installations in the supply base. What do you think will be the leading factors to change this?
3. Technology creates wealth and fuels growth, true. Where does that leave the moneychangers?
4. What ever happened to the quality revolution?
5. Imagine working in a factory village in the year 1820. What will be different about working in a factory village 200 years later?

About The Authors

Product Details

  • Publisher: Free Press (September 10, 2007)
  • Length: 336 pages
  • ISBN13: 9781416576488

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