America, We Have A Problem

Norman R. Augustine, Forbes.com,  March 24 2008, 6:00 AM ET

Congress recently scrambled to place a $152 billion Band-Aid on the nation's economy, but the underlying problems are likely to require such fixes with increasing frequency in the future.

These problems were brought to the fore three years ago when the National Academy of Sciences, the National Academy of Engineering and the Institute of Medicine--organizations that count 195 Nobel Laureates among their membership--conducted a study on America's ability to compete for jobs in an emerging global economy where five chemists in China or 20 assembly workers in Vietnam can be hired for the cost of one of these workers in America, and where physicians in India now read the CAT scans of patients in American hospitals. 

The resulting report, titled Rising Above the Gathering Storm, concluded that without both a dramatic increase in investment in basic research and reform of the nation's K-12 educational system, America's children are likely to have a lower standard of living than their parents. 

The report's warning did not go unheeded. 

A new research university is scheduled to launch soon with a day-one endowment of $10 billion, equal to what it took MIT 142 years to accumulate. Next year, over 200,000 students will study abroad, mostly in the fields of science and engineering, often under government-provided scholarships. Government investment in nondefense R&D is set to increase by 25% over the next few years. 

A multi-year initiative is under way to make the country a global nanotechnology hub. The world's most powerful particle accelerator will begin operation this year. And a high-level commission will conduct a followup to the Gathering Storm study with the objective of creating more jobs at home. 

The problem is that these actions were taken by Saudi Arabia, China, the U.K., India, Switzerland and Australia, respectively. As chair of the committee that wrote Gathering Storm, I have been asked to speak about its findings from Japan to Canada and from Australia to Europe. But what about America? 

Since the report was issued, the world-renowned Fermilab in Illinois responded to reductions in government research funding with layoffs and mandatory two-day-a-month unpaid "holidays" for its research staff. The U.S. portion of the international program to develop plentiful energy through nuclear fusion is being reduced to "survival mode." 

The U.S. trade deficit in high-technology goods further increased. Nearly all major U.S. high-tech firms now have research laboratories outside the country and are poised to expand them. American companies spent three times more on litigation than on research. 

Eighty percent of American CFOs surveyed said they would curtail R&D in order to meet short-term profit projections. The latest international standardized test for high school seniors in 30 nations revealed that students in only four nations performed significantly worse than U.S. students in science, and only five rated worse in math. Two-thirds of the Ph.D.s in engineering awarded by U.S. universities went to non-U.S. citizens. And U.S. K-12 teachers were reported to have worked 43 hours to earn $1,000, while Kobe Bryant earned that amount in five minutes and 30 seconds, and Howard Stern in only 24 seconds. 

Industrial firms in the U.S. and elsewhere have found an answer to these problems. 

Howard High, spokesman for Intel (nasdaq: INTC - news - people ) prior to his retirement, explains, "We go where the smart people are. Now our business operations are two-thirds in the U.S. and one-third overseas. But that ratio will flip over in the next 10 years." General Motors (nyse: GM - news - people ) spokesman Greg Martin put it: "We're a global car company that happens to be based in the U.S." Addressing root causes, Bill Gates observed, "When I compare our high schools with what I see when I'm traveling abroad, I'm terrified for our workforce of tomorrow." 

The irony is that America's leaders seem convinced of the importance of fixing K-12 math and science education and increasing government investment in basic research. In fact, the president made specific proposals to those ends in his 2006 State of the Union address, and the resulting authorization passed in the House 397-20 and the Senate by unanimous consent. However, due to an avalanche of 12,000 earmarks (Stanislaw Lee observed that "each snowflake in an avalanche pleads 'not guilty' "), and exacerbated by what can perhaps best be characterized as a system failure, the omnibus budget act that actually provides the funds to implement the government's programs failed to address America's competitiveness in any meaningful way. 

Churchill said that you can always count on the Americans to do the right thing after they have tried everything else. Our nation's leaders need to succeed in their bipartisan efforts to help Americans compete in a job market increasingly dominated by 3 billion would-be capitalists who entered the workplace after many of the world's political systems were restructured at the end of the last century. Otherwise, our nation's greatest export is likely to be our jobs and our standard of living. 

Norman Augustine is retired chairman of Lockheed Martin, former undersecretary of the Army and past chair of the National Academy of Engineering.

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Gartner IT Security Summit: Unilever launches staff security drive

Warwick Ashford, www.computerweekly.com, 15:43 29 Sep

Food manufacturer Unilever is tackling the human element of information security by introducing a global awareness programme across the organisation.

The company has recognised that most data breaches are not caused by technology failure, but by the lack of secure behaviour by employees with access to company data.

More than 140,000 IT users across the business in 150 countries will be required to complete a 20-minute security briefing and test in the coming months.

The second-life styled interactive online programme contains guidelines on how best to protect information in a variety of different business situations.

The "teach and test" programme, which is customised according to each employee's role, has been introduced as part of the company's information security communication initiative.

Andrew Strong, global security director at Unilever, said, "The initiative is aimed at changing the perception of security and ensuring each employee understands what is good behaviour for keeping information safe."

The "teach and test" programme is available through a security portal, which the company plans to use to update employees on changing security risks, procedures and policies.

"We can easily communicate key contemporary issues such as how to deal with laptop security checks at airports," said Strong.

Unilever plans to conduct regular internal and external surveys to measure behavioural change and assess whether key risks are being addressed and adapt security training accordingly.

Ballmer Still Searching for an Answer to Google

James Niccolai, IDG News Service

Microsoft may be the only company in a position to provide "any real competition" for Google in the online search business, CEO Steve Ballmer said Thursday. But first it will need to figure out a way to do it.

"We need to do some work to fundamentally reinvent the search business model," Ballmer said during a dinner at the Churchill Club in Silicon Valley. "You don't brute-force your way into a market. You only make great strides when you redefine the category for the user."

And that will take some time. "It's a five-year task," Ballmer said. But Microsoft is ready to spend a lot of money trying. The company told its shareholders recently that it was prepared to lose "5 to 10 percent of total operating income for several years" to improve its position in search, Ballmer said.

The CEO offered little in the way of new insights during the evening, except that Microsoft will discuss "Project Red Dog," its secretive cloud computing initiative, at the Microsoft Professional Developer Conference next month.

Red Dog has been described as "EC2 for Windows," a comparison with Amazon's Elastic Compute Cloud, said Ann Winblad, the venture capitalist who posed the questions to Ballmer. She asked him to elaborate but he said she would have to wait for the conference in six weeks.

Asked about server virtualization, Ballmer said Microsoft aims to "democratize" the technology by offering lower prices, integrated management tools and better-quality software. "If you want to have virtualization on 80 percent of servers instead of 5 percent, you'd better not charge three times the price of the server for the software," he said, in a jab at market leader VMware, which has been criticized for high prices.

Asked about smartphones, Ballmer said Nokia, Research in Motion and Apple will all lose out as the market expands over the next five years, because they design their own proprietary hardware and tie it closely to their software.

Nokia leads the smartphone market today with about a 30 percent share, he said. "If you want to reach more than that, you have to separate the hardware and software in the platform," he said.

In other words, he thinks the same strategy that helped Microsoft become the leader on the desktop -- licensing its OS for use by other hardware makers -- will let it win out on smartphones. Long term, he said, the battle will be between the Symbian OS (which is now open source), mobile versions of Linux and Windows Mobile.

Apple won't boost its share of the personal computer market or become a threat in the enterprise for similar reasons, according to Ballmer -- because it won't license its software to others.

"Apple's a good company, I won't take anything away from them, but they have a certain kind of strategy. They believe in putting the hardware and software together, they don't believe in letting other people make it."

"I'm not saying there isn't a threat" from Apple, he said. But if Microsoft and its PC partners "do our jobs right, there's really no reason Apple should get any footprint in the enterprise."

Microsoft does "very well on balance" when it comes to software developers, he said. But the company has two areas of weakness, according to Ballmer: high-performance and technical computing -- which is important to Microsoft because "there are 5 million engineers and they use a lot of compute power" -- and in Web server applications, where it is losing out to Linux and PHP.

"Forty percent of servers run Windows, 60 percent run Linux," he said. "How are we doing? Forty is less than 60, so I don't like it. ... We have some work to do."

Winblad asked about the health of the IT business in light of the economic crisis in the U.S. "At least for now, people I talk to in our business are relatively -- I wouldn't say optimistic -- but feel better than if all you did was watch CNBC all day," Ballmer said, referring to the U.S. television news channel.

A member of the audience asked Ballmer how he manages his stress and stays healthy. Ballmer, who looks thinner and fitter than he did a few years ago, said his regime consists of PowerBars "to keep the blood sugar steady," "a constant dose of caffeine," and running.

"I did a five-mile run this morning. It does a lot to ease the stress and set up a good day."