July 22, 2010

Scaling, not innovation

There was in interesting editorial in the business magazine Bloomberg by the founder of Intel, Andy Grove, on job creation.  In the editorial he shares his belief that for job creation the current focus on innovation and start-up companies, which we have wholeheartedly adopted in engineering education, needs to be matched by a stronger focus on "scaling".   In the editorial he defines scaling as "what comes after that mythical moment of creation in the garage, as technology goes from prototype to mass production. This is the phase where companies scale up. They work out design details, figure out how to make things affordably, build factories, and hire people by the thousands."

Grove's article is about job creation, and the negative impact outsourcing has had on American companies ability to scale.  In the article he proposes a simple metric to measure job creation, the "employment effectiveness" which is the investment made up to a company's initial public offering (IPO) and divide that by the number of employees ten years later.  For start-ups like Intel and National Semiconductor back in the '80's this figure was around $2K to $10K.  Today, due to outsourcing and difficulty in scaling, Grove asserts it is more like $100K.

What does this mean for engineering education?  That we should all run out and write grants to develop programs to teach engineering students about scaling?  No, that will be learned after school.  Rather that in my opinion one of the most critical problems we face in engineering education is that of scaling, not innovation.  How do we scale the innovations in learning we have already developed?  How do we measure, in a simple and transparent way, the efficiency of scaling innovations to many degree programs?  What in our "business climate" hinder scaling?  What is our "educational efficiency" calculated in terms of investment in educational development costs to the number of students affected ten years later?

In his editorial Andy Grove went out on a limb to recommend what might be considered drastic measures to recover job growth in this country:
The first task is to rebuild our industrial commons. We should develop a system of financial incentives: Levy an extra tax on the product of offshored labor. (If the result is a trade war, treat it like other wars -- fight to win.) Keep that money separate. Deposit it in the coffers of what we might call the Scaling Bank of the U.S. and make these sums available to companies that will scale their American operations. Such a system would be a daily reminder that while pursuing our company goals, all of us in business have a responsibility to maintain the industrial base on which we depend and the society whose adaptability -- and stability -- we may have taken for granted. 
Our problem, and likely the solution, may be similar. Build an educational commons through financial incentives.  Encourage transparency in university finances and demand that some significant fraction of indirect costs be placed in this commons coffer, not for one university, but for all universities.  Colleges that wish to adopt, i.e. to scale, educational innovations by adopting proven techniques can tap into this fund.  Innovate on what an education commons will look like and how it can level the playing field not just between universities, but between all those involved in the educational endeavor..  Dale Dougherty, the founder of Make Magazine, has some brilliant ideas on this subject.

Days after I posted this, released a table of college's return on investment which they got by mining salary data. I have no idea how accurate this data is, but it is interesting to look think about in terms of other investments.