Around the Corner

Did you see it coming? Some thought they did.

Switzerland is now the most competitive economy in the world. According to the World Economic Forum’s Global Competitiveness Report just released on September 8, 2009, the US is now the world’s second most competitive economy followed by Singapore. Sweden and Denmark complete the top five.

I could say there’s some consolation that we were edged out by only a tenth of a point, but the long predicted decrease in our nation’s competitiveness as reflected in its rank in the Global Competitiveness Index (CGI) should give us reason to take stock of both cause and effect. Have the predictions of the National Academies' Rising Above the Gathering Storm report finally come true? Does the Rand Foundation really wear rose colored glasses as reported by the Information Technology Innovation Technology Foundation? Or can we disregard these warnings and assume that when the global economic crisis subsides the US will once again be the most competitive economy in the world? How important is our competitive rank? Like an athlete, is competitive success about training harder, or as I do on my bike, is it about going back to basics?

The GCI is just one indicator, but the research is well done and a close look at its pillars reveals very useful information about current US competitiveness. The most striking changes are in Basic Requirements and Financial Markets. The US dropped six points in Basic Requirements to 28th out of 133 countries surveyed. Basic Requirements is a sub-index of the GCI associated with low-innovation, factor-driven economies. Its four pillars are Institutions, Infrastructure, Macroeconomic Stability and Health and Primary Education. The global financial crisis resulted in a loss of a full 33 points in Macroeconomic Stability which brings the US down to 93/133. Can you imagine that puts us right between Gambia (92) and the Dominican Republic (94)?

Indicators within each pillar reveal more of the details. Strength of Auditing and Reporting Standards fell by 19, Efficacy of Corporate Boards by 8 and Protection of Shareholders Interests by 14. Troubling losses also occurred outside Basic Requirements. Soundness of Banks fell by 68 points. That puts us at 108/133, just behind Tanzania! Rounding out financial markets, Regulation of Securities and Exchanges fell by 27 points. Two other noticeable changes were a 15 point drop in Business Impact of Rules on Foreign Direct Investment and a 9 point drop in Foreign Direct Investment and Technology Transfer. Whether or not one agrees with these specific measures, it is clear that weak financial markets have taken a toll on U.S. competitiveness.

Despite these losses, the US retains its competitive advantage in the Innovation and Sophistication Factors sub-index. So we can coast, right? No, it’s actually in this pillar that we get our best indicators of how to assess US competitiveness against the National Academies and the ITIF predictions. Overall we lost some ground, but we did gain in one key indicator. We’re now fifth, up one since last year, in Availability of Scientists and Engineers. We lost the top rank to Switzerland in Quality of Scientific Research Institutions. We lost two places in Company Spending on R&D and we’re down one to third place in Utility Patents.

So did we see it coming? Well, we didn’t expect the financial crisis and that’s where the numbers seems to have affected our rank the most. On what we did see, the work of the National Academies and ITIF provide solid indicators of what may become long term trends if not properly addressed through science and technology policy. The good news is that’s already taking place. We haven’t lost much ground yet on these important indicators, but when it comes to competition losing ground is a serious issue. Whether riding my bike, or in national competitiveness there’s usually one safe bet: go back to basics.

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I recently wrote about the SmartGrid. Did you know the US is not the only country planning a SmartGrid? The European Union (EU) is also planning a SmartGrid. In fact, the European Commission, the executive branch of the EU, is taking some very important steps to update its electrical transmission and distribution systems. The European Commission sponsors the European Technology Platform for the Electricity Networks of the Future (ETPENF) and leading investors in ten EU member countries sponsor the Desertec Foundation.

When it comes to the production, transmission and distribution of electricity, sustainability matters. ETPENF aims to increase the efficiency, safety and reliability of EU transmission and distribution systems. Efficient, safe and reliable electrical systems means better managed systems. Desertec plans to harvest wind and solar energy from the deserts of North Africa for transmission and distribution to the EU. And for tomorrow, sustainability will require well managed electrical transmission and distribution systems supplied by renewable resources.

A nation's abililty to produce, transmit and distribute electricity has become recognized as part of its global competitiveness. You might remember I previously wrote about the World Economic Forum's (WEF) Global Competitiveness Report (GCR) and Global Information Technology Report (GITR). Both the GCR and GITR include electricity supply in their assessments. GCR in Institutions, Infrastructure where the US ranks 16th for quality and the GITR in Environment, Infrastructure where the US ranks 8th for production.

In July the WEF in partnership with Accenture released Accelerating SmartGrid Investments, a new report that nicely defines the SmartGrid and discusses barriers to implementation and their solutions. The report indicates that electricity production, transmission and distribution require better alignment of regulatory and policy frameworks. Today, the regulatory environment lacks incentives for private sector investment in carbon capture, reliability and security on electrical grids. Tomorrow, the regulatory environment will need to reward risk for investment in emerging technologies that help make the grid smart and distribute that risk among producers and consumers. SmartGrid investments under the American Recovery and Reinvestment Act help to reduce that risk.

Cities will serve as as catalysts for SmartGrid investments too: Boulder, Colorado and Austin, Texas are already smart grid cities. And GSA's Public Building Service Office of Sustainable Design leads Federal agencies with investments in high performance green buildings that meet the LEED standard and incorporate sustainable design into Federal workplaces because Sustainability Matters.

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Hey, I'm Rick Murphy. Casey's out and gave me a guest spot to share some thoughts on where we are with what some folks are calling Web 3.0 and what it might mean in our lives and our jobs.

Web 3.0 is really just the idea of a smart Web that helps people at home and work. Remember that Web 2.0 is a response to the perception that heavyweight planning and technologies were slowing us down. Our tools were too complex. We quickly put blogs, wikis and other social media utilities in place that shifted complexity away from our tools, but cause us to manage that complexity. For an excellent talk on this issue, see Ross Mayfield's All Things 2.0 Are Made of People, part of PARC's Beyond Web 2.0 series.

The success of Facebook and Twitter increase the information available to us. Now that we all have 500+ friends and Tweets streaming at us faster than we can read, how do we keep up? Our lifestreams are overrunning our lives. Whether we tag our family photos or search the Web, we expect to get all relevant results and exclude the ones that are irrelevant so we don't have to filter them ourselves. We need a smart Web that reduces the burden of the complexity that we've taken on ourselves. Web 3.0 is the idea that we can add some smarts, known as the Semantic Web, to Web 2.0. These smarts help us at home and work by reducing this complexity.

So where are we with Web 3.0 and the Semantic Web? Since the 2001 Scientific American article by Tim Berners-Lee, Jim Hendler and Ora Lassila, both skeptics and supporters have sought evidence that the Semantic Web has been adopted. The good news is that the favorable climate for innovation recently accelerated adoption of Semantic Web technologies. Most recognizably, both Google and Yahoo announced support through their Rich Snippets and Search Monkey offerings. The UK Government moved the London Gazette, a four hundred year old publication, to the Semantic Web. You can hear more in this podcast from my colleague John Sheridan, Head of e-Services, of the UK Government's Office of Public Sector Information. Datasets from data.gov are already available for the Semantic Web and our team has used Semantic Web technologies in our Enterprise Architecture practice.

Web 3.0 is the idea of a smart Web that helps people at home and work. Facebook will produce more meaningful information about relationships among family and friends. We might discover meaningful trends among Tweets. And we'll spend less time filtering inaccurate search results.

Web 3.0 and the Semantic Web are happening now, but they won't happen all at once. And there's no more appropriate time to recall the well known William Gibson quote: "As I've said many times: the future's already here, it's not just very evenly distributed."

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I hope that by now you've had the opportunity to follow the speakers who appeared at the Management of Change Conference. Aneesh Chopra, Rob Carey, Clay Shirky and Vivek Kundra were all very well received. Vivek Kundra provided his very compelling vision for a Federal government that is open by default. "Open by default" means that the beginning presumption for federal agencies is that their data should be published and publicly available, unless privacy or security considerations indicate otherwise.

Several days ago Vivek Kundra, our federal Chief Information Officer, spoke at Wired magazine's Disruptive by Design Conference where he elaborated on that vision by describing the work of Federal Agencies on data.gov. Nancy Scola of Wired reports: “The premise behind behind Data.gov goes to the philosophy around transparency and open government that the president has been talking about. What we want to do is democratize data and democratize information and put it in the public square,” said Kundra. “The default setting of the United States should not be that everything should be secret and closed.”

An open default setting allows the American people to find innovative paths to society's most compelling challenges. You might remember that in my first post here on Around the Corner I mentioned Nassim Taleb's Black Swan. In the Black Swan, Taleb, a notable economic skeptic, identifies selection bias as a high risk to large-scale problems. The Skeptic's Dictionary defines selection bias as the "self selection of individuals to participate in an activity or survey, or as a subject in an experimental study." Of course, Federal IT investments are not experimental studies, but the open by default setting removes selection bias by allowing any and all American citizens to actively participate in mashing up their own data in ways that they determine. Organizations like the Sunlight Foundation play an instrumental role in democratizing data by sponsoring x-prizes or contests like the ongoing Apps For America 2.

This week the government is accelerating the publication of data. Data will be published in as many formats as possible, as close to raw as possible, and there is a preference for machine readable formats.

I hope you will have the opportunity to mashup your data. You can find it here. If you can't find it yet, there's more on the way.

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You may have noticed my last few posts were about institutions, management and leadership. I'll continue to write more about these important aspects of innovation, but I want to take the opportunity in this post to recognize the power of participation.

Today, the pervasiveness of technology makes it possible for almost every citizen to actively participate in government. Both dramatic reductions in technology costs and new technologies that have recently become available allow individuals from diverse backgrounds to voice their opinions and engage in public dialogue. As President Obama points out in his Transparency and Open Government Directive, participation and public engagement improve the quality of government decisions. Participation improves government decisions because knowledge is widely dispersed throughout society and today's technologies make more of that information available to government executives. The National Dialogue, sponsored by the National Academy of Public Administration on behalf of the Recovery and Accountability Transparency Board, serves as a good example of the kind of public dialogue that can take place today.

That dialogue has concluded, but now you can participate in shaping President Obama's Transparency and Open Government directive. The Office of Science and Technology Policy yesterday placed this notice in the Federal Register that members of the public are invited to participate in the process of developing recommendations that will inform the Transparency and Open Government Directive. Visit the Open Government Brainstorm to submit your ideas on the best ways to "strengthen our democracy and promote efficiency and effectiveness by making government more transparent, participatory, and collaborative." You can also vote on ideas others have submitted, and the most popular ideas will rise to the top of the queue for possible implementation. When I visited the Brainstorm earlier today, there were already 166 ideas submitted and 4702 votes cast.

Equally important is participation in our broader civil society. Civil society is typically understood as the uncoerced collective actions of people around their shared interests, purposes and values that create public goods exclusive of traditional market mechanisms. Wikipedia is a great example of a social good produced by civil society. Those of us familiar with the open source software community would also recognize the Apache Web Server, the most widely used web server on the Internet, as another great example of a public good produced by civil society.

Yochai Benkler recognizes the significance of participation in civil society in his Wealth of Networks. Benkler introduces the term social production to describe the output of a civil society. He then goes on to examine how individuals and organizations participate in the production of public goods, then describes the economics of social production.

Today, whether through participation in government, or participation in civil society, participation is power. And technology places the power with you.

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A little over three years ago the National Academies published Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future. The Gathering Storm report is the Academies' response to a request by Senators Lamar Alexander and Jeff Bingaman of the Senate Committee on Energy and Natural Resources to “conduct an assessment of America’s ability to compete and prosper in the 21st century – and to propose appropriate actions to enhance the likeliness of success in that endeavor.”

During this global economic crisis the Gathering Storm report seems even timelier than when it was written. The findings in the report come as no surprise: that America faces serious and intensifying challenges to its competitiveness as do Americans to our standard of living; that pervasive information and communication technologies (ICTs) have intensified competition for high paying jobs across national boundaries; and that knowledge and innovation are crucial to American competitiveness as well as each individual’s standard of living.

Since the Gathering Storm report was issued, the mortgage crisis impacted both employment and our standard of living in ways the Academies did not anticipate, yet the recommendations of the report remain all too relevant. Just last month before the House Appropiations Committee on Commerce, Justice and Science, Norman Augustine, Chair of the National Academies committee that produced the report, testified that “It is perhaps appropriate at this point to note why the Gathering Storm committee placed such great emphasis on science and engineering, including the endeavors of research and education. The reason is that while scientists and engineers comprise only four percent of the nation’s workforce, they disproportionately create jobs for the other 96 percent … and jobs for all citizens is what the Academies report was really about. Numerous other studies have shown that over the last half century between 50 and 85 percent of the growth in Gross Domestic Product is attributable to advancement in science and engineering. In the current century, the Knowledge Century, this effect is likely to be even more prominent.”

The World Economic Forum’s Global Information Technology Report (GITR) provides a framework to understand how 134 nations comprising 98% of the world’s Gross Domestic Product (GDP) are prepared to emerge from the global economic crisis. This framework called the Network Readiness Framework (NRF) measures the extent to which economies benefit from the latest ICT advances where benefit means each nation’s competitive position ranked according to an associated Network Readiness Index (NRI). The NRI includes weighting for many factors mentioned in the Gathering Storm report and although the GITR focuses only on ICTs it serves as a useful companion to the Gathering Storm report. Most importantly, Figure 1 demonstrates a high correlation between the NRI score and Per Capita GDP providing solid evidence of Mr. Augustine’s claim that growth in GDP is attributable to science and technology.

So how competitive is the U.S. three years after the Gathering Storm report according to the NRI? We rank at #3 overall, up one place from last year and four places the year before. Again it’s no surprise that countries ranked high in the World Bank knowledge economy index also rank high in GITR, with Denmark once again ranked #1 and European nations taking 7 of the top ten spots. Our strengths are in venture capital availability (#1), quality of scientific research institutions (#1), and business internet use (#1), and e-government participation (#1). By contrast we score low in the following criteria: effectiveness of law making bodies (#33), property rights (#26), quality of math and science education (#48), government prioritization of ICT (#18), importance of ICT to government vision of the future (#28), government success in ICT promotion (#21), ICT use and government efficiency (#18), and presence of ICT in government offices (#16).

So the GITR has some good news as well as a useful comparative analysis supporting our future planning. I hope you'll take the time to read either the report highlights or browse the interactive version.

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The global financial crisis overshadowed today's sessions at the World Economic Forum in Davos, Switzerland. The World Economic Forum is an international non-profit organization that is committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas. It holds an annual meeting at this time each year and 2009 is its thirty-eighth year of international leadership. In addition to the global economic crisis, other topics for this year's meeting include energy, climate, governance, poverty and education.

Technology plays an especially relevant role at the World Economic Forum this year. In addition to the now-mainstream webcast and podcast information delivery channels, this year social media utilities allow us all to better engage, debate and attend. It may come as a surprise that we can be part of such a remote conference, but through Facebook, Twitter and Youtube we can do just that, at least virtually.

Citizen journalism is very active through Youtube and MySpace Citizen Reporter channels. The World Economic Forum sponsors an open group on Facebook with over 2,100 members. You'll also find chat sessions and a Youtube channel. And for the most current updates, follow the Davos tweets on Twitter.

The World Economic Forum continues throughout the next four days. I hope you will have the opportunity to engage, debate and attend. Enjoy !

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