2008년 6월 13일 금요일
20501034 Entry 15
Moth Kanter in Chosun Ilbo on May 10 2008
Summary
Many people has stereotype about the big corporations. However, this is the different era. The giants companies could be also fast and flexible.IBM, P&G, Cemex, Cisco, Banco Real, these are the world renowned companies which is fast and flexible. The professor found the common things from those companies.
Many people has stereotype about the big corporations. However, this is the different era. The giants companies could be also fast and flexible.IBM, P&G, Cemex, Cisco, Banco Real, these are the world renowned companies which is fast and flexible. The professor found the common things from those companies.
In the one hand, they globalized themselves. On the other hand, they localized. They standardize but at the same time innovate. They emphasize on universality and diversity. Not only this, they tey to realize value creation and social contribution. They grow not only "Soft Asset; people, culture, and responsibilities" but also "Hard asset; techonologies and product innovation"
My opinion
I have been seeing that many huge corporations like Enron, Daewoo, Worldcom went into bankruptcy. However, I think it will be hard to see the large corporation falling down in the future. The giants of the present have a lot possibilities to remain as the giants in the future.
I found the similar evolution of the enterprise with evolution of the poitics. Socio-economic has been improved experiencing trial and error. According to the Karl Marx, socio-economic system has been through primitive, slavery, medieval, capitalism, socialism and the final stage he predicted is communism. Communism as a last resort could be controversial but the initial intention of communism is to distribute the goods as many people as possible and everybody can share what they deserve. I believe the business will follow those development steps as socio-economic system does.
From the past, companies have been expanding its boundary. Family to 
the town. Town to the province. Province to the nation. And the nation to the globe. Once globalized, the companies realized how important to sustainably develop satisfying and feeding all the members who involved. They should keep middle income family through contributing and helping, so that they can keep pumping money from out of them. Therefore, they contribute the society and try to grow with the world that they are surrounded by.
the town. Town to the province. Province to the nation. And the nation to the globe. Once globalized, the companies realized how important to sustainably develop satisfying and feeding all the members who involved. They should keep middle income family through contributing and helping, so that they can keep pumping money from out of them. Therefore, they contribute the society and try to grow with the world that they are surrounded by. 20501034 Entry 14
CEO's role and Value Preposition
My Opinion
By Ahn Sukwoo from Chosun Ilbo on June 8 2008
Summary
How the company Apple was dependent on the current CEO, Steve Jobs was proven when Steve Jobs had Pancreatic cancer. When his having cancer was announced, Apple's stock was decreased about 2.4%. One of the finest Wallstreet investors predicted "If Steve Jobs leave the Apple, Apple's stock price will be decreased about 20%. How the huge organization like Apple that control tens of thousand of employees can be influenced by just one CEO? It is because strategic postioning that CEO made will decide companies performances.My Opinion
Strategic positioning is the strategy that corporation concentrates given resources on the target market. However, this strategic positioning is getting difficult and challenged especially in service industry, because customers’ needs are becoming more diverse and it is getting hard to find common things among them. If the company is big enough, it can target various kind of market at the same time. However, if the company doesn’t have enough resources, it’s almost impossible to target various markets. Even though, the company that has enough cash and capacity, it became very hard to keep competitive advantages in every market they are getting involved with. In the worst case, the company could front the fact that they don’t have any competitive power in any market. Therefore, many times, it could be more efficient to target sp
ecific demographics and heavily focus specialized competitive advantages and resources on the target group. Once the company positioned in specific target group in the market through this strategy, the satisfied consumers who were targeted by the company can create new customers in the other market through the oral marketing.
ecific demographics and heavily focus specialized competitive advantages and resources on the target group. Once the company positioned in specific target group in the market through this strategy, the satisfied consumers who were targeted by the company can create new customers in the other market through the oral marketing. The market that the company concentrates on could be the specific area or particular age group. The important thing is to arrange the very narrow target group and massively focus on. When Starbuck laun
ched into Korea for the time, they did strategic positioning. They decided highly targeted places, City hall, Jong-ro, Gangnam where most people who have purchase power walk around and Starbucks opened the shop almost every corner of this districts. As a result of this strategy, Starbucks could successfully appeal the luxurious image and high quality and then it was kind of easy to open the business in other district because Starbucks already got a reputation among people.
ched into Korea for the time, they did strategic positioning. They decided highly targeted places, City hall, Jong-ro, Gangnam where most people who have purchase power walk around and Starbucks opened the shop almost every corner of this districts. As a result of this strategy, Starbucks could successfully appeal the luxurious image and high quality and then it was kind of easy to open the business in other district because Starbucks already got a reputation among people. Of course, this strategic positioning isn’t always successful and it is quite risky to put all the resources into the specific target group. Therefore, the company should have enough time to consider about what their competitive advantages are and how to implement it.
Entry # 21 20600331
My Opinion/Summary:
The reintroduction of United States beef into the Korean market happened on the eve of Lee Myung Bak’s term of office. This is not a good strategic plan for him in Korea. United States beef has not been in Korea since last year when a full ban went on it. Lee Myung Bak’s approval rate dropped dramatically since his landslide victory over his competitors. Furthermore, no Korean president’s approval rating has dropped so low and so quickly. The Korean public has disliked this decision so much that they have been protesting in the streets. More than protesting, they tried to march onto Lee Myung Bak’s house. However, they were met with force from the Korean Police.
Another problem that Lee Myung Bak is facing is that his policy-makers pushed for exports. This fueled growth in the economy, however, inflation has taken a huge rise. Therefore, prices of everything and not just oil are rising in the United States. Public opinion is a huge part holding a public office. The public opinion of him is growing worse and worse everyday.
All of these problems are not allowing Lee Myung Bak to implement the plans that he wishes to put forth. The negative publicity put into place with his first two decisions in office is greatly hindering the possible good that could possible be done. With such hostility in the air, it would be wise and prudent to change something in the policy.
--------------------------------------------------
Korea's U.S. Beef Brouhaha
President Lee Myung Bak's removal of restrictions on U.S. beef has plunged his administration into a crisis that could imperil a free-trade pact with the U.S.
South Korean riot police disperse protesters as they try to march to the Presidential House after a candlelight vigil against US beef imports, in Seoul on June 8, 2008.
by Moon Ihlwan
Rarely has a newly anointed Korean President fallen so far and so fast. Less than four months into a five-year term, Lee Myung Bak's decision to remove restrictions on U.S. beef has sparked widespread protests over food safety and engulfed his administration in a crisis that threatens a free-trade agreement (FTA) between the two countries. Lee's approval ratings have plunged to new lows, and opposition politicians are planning to boycott Parliament.
It wasn't supposed to happen this way. Lee had strong voter backing after winning a landslide victory in December. On Apr. 18, Lee, eager to cement ties with his country's closest ally, lifted the ban on U.S. beef imports for the first time since it was re-imposed last year. Korea had banned all American beef in 2003 following an outbreak of mad cow disease in the U.S. Seoul briefly allowed in boneless beef from cattle younger than 30 months of age before suspending that last year when bone chips turned up in shipments.
Seoul had hoped to coax the U.S. Congress into ratifying a free-trade accord, which the two governments signed last year. The lifting of the ban came on the eve of Lee's first summit with President George W. Bush in the U.S. in April. Korea was once the third-largest U.S. export market for American beef, with an annual turnover of more than $800 million a year. The on-again, off-again beef ban had fueled opposition to the free-trade pact among key members of the U.S. Congress, including Senate Finance Committee Chairman Max Baucus, from the beef-producing state of Montana. A grand gesture from Seoul might do the trick, was the thinking.
Protests Outside Seoul's Blue House
So much for grand gestures. For the past three nights, as many as 60,000 farmers, students, and housewives have demonstrated against the resumption of American beef imports. They have jammed Seoul's streets leading to the Blue House, the presidential residence. Many of them have shouted slogans demanding Lee's ouster for risking public health, and accused the Korean leader of kowtowing to Washington. Some think Seoul could have let in beef from young cattle bred in the U.S. but kept out meat from older cattle, which are more susceptible to mad cow disease. Korea's neighbor Japan bans imports of beef from older cattle.
Lee's loss of popular support has been swifter than anything ever experienced by a Korean President. His approval ratings (BusinessWeek.com, 12/18/07) are now below 20%, down from almost 60% in early March. And a June survey by pollster Korea Research and YTN cable news network has shown that 87% of those polled expressed disappointment with the government's talks with U.S. officials over beef. "We have reached a point where we can't expect much political leadership in Korea," lamented Lee Hahn Koo, a senior member of Parliament from the ruling Grand National Party, on June 9.
Government officials worry that the row could derail the free-trade pact, which experts estimate could boost two-way trade by $20 billion annually. Opposition lawmakers have boycotted a new session of parliament this month, threatening to shelve the trade pact for now. "Given huge political pressures, it would be difficult even for the Korean National Assembly to ratify the FTA unless the beef issue is resolved," says a senior aide to Lee who asked not to be identified.
Rising Inflation Hurting Consumer Confidence
Lee's misfortunes aren't only beef-related. His choice of policymakers, who pushed for export-fueled growth but didn't worry enough about inflation, hasn't helped. Amid soaring oil and material prices, Lee's government allowed the Korean currency, the won, to depreciate by about 10% against the U.S. dollar. That helped propel inflation to a seven-year high of 4.9%. Now with consumer confidence at a low ebb the government faces the prospect of missing its target for 6% economic growth this year. Private economists forecast growth between 4% and 4.9%, compared to last year's 5% growth and 5.1% in 2006.
The brouhaha over beef is interfering with Lee's plan to institute pro-business reforms. He is pushing to privatize government assets that would free up tens of billions of dollars to stimulate the economy as well as an ambitious tax reform package. Also on the agenda: a tougher hand with labor unions and deregulation of the financial-services sector. "Lee's blueprint for change is fading badly even before he opens it," says Park Gil Sung, a sociology professor at Korea University.
Seoul is hoping Washington can step in with a diplomatic solution to defuse the crisis. On June 9, Lee dispatched a team of negotiators to Washington, asking them to make sure shipments of beef from cattle older than 30 months won't be allowed. At the weekend, Lee called Bush for a 20-minute phone conversation during which Bush, who is scheduled to visit Seoul in July, told Lee that Washington would cooperate closely with Seoul. He said the U.S. is "ready to support American cattle exporters as they reach a mutually acceptable solution with Korean importers on the beef trade," according to White House spokesman Gordon Johndroe, who gave no further details.
The Beginning of a Trade War?
Eager to appease an angry public, Seoul is grappling for a solution. It could press for a renegotiation of the terms of the beef trade. But asking the U.S. back to the table or scrapping the existing accord could trigger calls in the U.S. for tit-for-tat amendments to the free-trade pact. Detroit's concerns that Korean cars and parts will surge into the U.S., risking even more U.S. auto industry jobs, might find a more receptive audience in Congress.
Could the tensions develop into a full-blown trade war? It's possible, says Han Sangwan, chief economist at think tank Hyundai Research Institute in Seoul. The beef dispute could become a bigger issue if it's taken up during this year's U.S. Presidential election. The Korean public could inflame tensions, too. "Unless the U.S. shows flexibility over its beef exports to address Koreans' concerns over food safety, a wholesale boycott of U.S. products could follow," says Han. "And that could trigger protectionist retaliation." The collapse of an FTA would mean a "serious chasm between the two," he adds.
Lee now appears to be reconsidering the hard-charging style that he displayed as the CEO at Hyundai Group. The forcefulness that worked at a conglomerate that has long epitomized Korea's breakneck industrialization is being regarded as a liability and the mark of a leader who is deaf to public demands. In a meeting with Catholic priests on June 9, Lee admitted that he had made policy mistakes and hinted at a Cabinet shakeup. Already seven top presidential aides have offered to resign. Winning back the public's trust won't be easy for Lee.
Moon is BusinessWeek's Seoul bureau chief.
The reintroduction of United States beef into the Korean market happened on the eve of Lee Myung Bak’s term of office. This is not a good strategic plan for him in Korea. United States beef has not been in Korea since last year when a full ban went on it. Lee Myung Bak’s approval rate dropped dramatically since his landslide victory over his competitors. Furthermore, no Korean president’s approval rating has dropped so low and so quickly. The Korean public has disliked this decision so much that they have been protesting in the streets. More than protesting, they tried to march onto Lee Myung Bak’s house. However, they were met with force from the Korean Police.
Another problem that Lee Myung Bak is facing is that his policy-makers pushed for exports. This fueled growth in the economy, however, inflation has taken a huge rise. Therefore, prices of everything and not just oil are rising in the United States. Public opinion is a huge part holding a public office. The public opinion of him is growing worse and worse everyday.
All of these problems are not allowing Lee Myung Bak to implement the plans that he wishes to put forth. The negative publicity put into place with his first two decisions in office is greatly hindering the possible good that could possible be done. With such hostility in the air, it would be wise and prudent to change something in the policy.
--------------------------------------------------
Korea's U.S. Beef Brouhaha
President Lee Myung Bak's removal of restrictions on U.S. beef has plunged his administration into a crisis that could imperil a free-trade pact with the U.S.
South Korean riot police disperse protesters as they try to march to the Presidential House after a candlelight vigil against US beef imports, in Seoul on June 8, 2008.
by Moon Ihlwan
Rarely has a newly anointed Korean President fallen so far and so fast. Less than four months into a five-year term, Lee Myung Bak's decision to remove restrictions on U.S. beef has sparked widespread protests over food safety and engulfed his administration in a crisis that threatens a free-trade agreement (FTA) between the two countries. Lee's approval ratings have plunged to new lows, and opposition politicians are planning to boycott Parliament.
It wasn't supposed to happen this way. Lee had strong voter backing after winning a landslide victory in December. On Apr. 18, Lee, eager to cement ties with his country's closest ally, lifted the ban on U.S. beef imports for the first time since it was re-imposed last year. Korea had banned all American beef in 2003 following an outbreak of mad cow disease in the U.S. Seoul briefly allowed in boneless beef from cattle younger than 30 months of age before suspending that last year when bone chips turned up in shipments.
Seoul had hoped to coax the U.S. Congress into ratifying a free-trade accord, which the two governments signed last year. The lifting of the ban came on the eve of Lee's first summit with President George W. Bush in the U.S. in April. Korea was once the third-largest U.S. export market for American beef, with an annual turnover of more than $800 million a year. The on-again, off-again beef ban had fueled opposition to the free-trade pact among key members of the U.S. Congress, including Senate Finance Committee Chairman Max Baucus, from the beef-producing state of Montana. A grand gesture from Seoul might do the trick, was the thinking.
Protests Outside Seoul's Blue House
So much for grand gestures. For the past three nights, as many as 60,000 farmers, students, and housewives have demonstrated against the resumption of American beef imports. They have jammed Seoul's streets leading to the Blue House, the presidential residence. Many of them have shouted slogans demanding Lee's ouster for risking public health, and accused the Korean leader of kowtowing to Washington. Some think Seoul could have let in beef from young cattle bred in the U.S. but kept out meat from older cattle, which are more susceptible to mad cow disease. Korea's neighbor Japan bans imports of beef from older cattle.
Lee's loss of popular support has been swifter than anything ever experienced by a Korean President. His approval ratings (BusinessWeek.com, 12/18/07) are now below 20%, down from almost 60% in early March. And a June survey by pollster Korea Research and YTN cable news network has shown that 87% of those polled expressed disappointment with the government's talks with U.S. officials over beef. "We have reached a point where we can't expect much political leadership in Korea," lamented Lee Hahn Koo, a senior member of Parliament from the ruling Grand National Party, on June 9.
Government officials worry that the row could derail the free-trade pact, which experts estimate could boost two-way trade by $20 billion annually. Opposition lawmakers have boycotted a new session of parliament this month, threatening to shelve the trade pact for now. "Given huge political pressures, it would be difficult even for the Korean National Assembly to ratify the FTA unless the beef issue is resolved," says a senior aide to Lee who asked not to be identified.
Rising Inflation Hurting Consumer Confidence
Lee's misfortunes aren't only beef-related. His choice of policymakers, who pushed for export-fueled growth but didn't worry enough about inflation, hasn't helped. Amid soaring oil and material prices, Lee's government allowed the Korean currency, the won, to depreciate by about 10% against the U.S. dollar. That helped propel inflation to a seven-year high of 4.9%. Now with consumer confidence at a low ebb the government faces the prospect of missing its target for 6% economic growth this year. Private economists forecast growth between 4% and 4.9%, compared to last year's 5% growth and 5.1% in 2006.
The brouhaha over beef is interfering with Lee's plan to institute pro-business reforms. He is pushing to privatize government assets that would free up tens of billions of dollars to stimulate the economy as well as an ambitious tax reform package. Also on the agenda: a tougher hand with labor unions and deregulation of the financial-services sector. "Lee's blueprint for change is fading badly even before he opens it," says Park Gil Sung, a sociology professor at Korea University.
Seoul is hoping Washington can step in with a diplomatic solution to defuse the crisis. On June 9, Lee dispatched a team of negotiators to Washington, asking them to make sure shipments of beef from cattle older than 30 months won't be allowed. At the weekend, Lee called Bush for a 20-minute phone conversation during which Bush, who is scheduled to visit Seoul in July, told Lee that Washington would cooperate closely with Seoul. He said the U.S. is "ready to support American cattle exporters as they reach a mutually acceptable solution with Korean importers on the beef trade," according to White House spokesman Gordon Johndroe, who gave no further details.
The Beginning of a Trade War?
Eager to appease an angry public, Seoul is grappling for a solution. It could press for a renegotiation of the terms of the beef trade. But asking the U.S. back to the table or scrapping the existing accord could trigger calls in the U.S. for tit-for-tat amendments to the free-trade pact. Detroit's concerns that Korean cars and parts will surge into the U.S., risking even more U.S. auto industry jobs, might find a more receptive audience in Congress.
Could the tensions develop into a full-blown trade war? It's possible, says Han Sangwan, chief economist at think tank Hyundai Research Institute in Seoul. The beef dispute could become a bigger issue if it's taken up during this year's U.S. Presidential election. The Korean public could inflame tensions, too. "Unless the U.S. shows flexibility over its beef exports to address Koreans' concerns over food safety, a wholesale boycott of U.S. products could follow," says Han. "And that could trigger protectionist retaliation." The collapse of an FTA would mean a "serious chasm between the two," he adds.
Lee now appears to be reconsidering the hard-charging style that he displayed as the CEO at Hyundai Group. The forcefulness that worked at a conglomerate that has long epitomized Korea's breakneck industrialization is being regarded as a liability and the mark of a leader who is deaf to public demands. In a meeting with Catholic priests on June 9, Lee admitted that he had made policy mistakes and hinted at a Cabinet shakeup. Already seven top presidential aides have offered to resign. Winning back the public's trust won't be easy for Lee.
Moon is BusinessWeek's Seoul bureau chief.
Entry # 20 20600331
My Opinion/Summary:
Retirement wage gap is a big problem between men and women. Women usually take off of work for a period of time due to maternity leave. However, when they do come back and catch up on the time lost due to a baby in the family, they still come up short to their male counterparts. Female workers in the United States earn about $0.77 per every $1.00 that equal male workers make. Over the course of the working lifetime that is a difference of three hundred thousand dollars. Therefore, a disparity in the payrate between men and women in the workforce is translated into a disparity in the retirement wage between men and women.
This is a problem strategically in the United States. There are more and more women entering the workforce. Furthermore, there are more and more women graduating out of college every year. If this continues, there will be more and more disgruntled women employees throughout the United States. With women becoming a bigger and more prominent part of the workforce, if they decided to strike, it could lead to a huge situation in the United States economy.
With this problem becoming bigger everyday, the United States cannot continue to ignore this problem and make reparations starting today.
-----------------------------------------------------
Article: Overcome the Retirement “Gender Gap”
by Stephanie Loiacono
Wednesday, May 28, 2008
Many people won't save enough money for a comfortable retirement, but women have an even higher risk than men of coming up short when they stop working.
There are three key factors that have the greatest influence on retirement savings: income levels, risk tolerance and life expectancy. In each of these categories, women may hold the losing hand. Read on to learn why women fall behind on retirement savings and what they can do to catch up.
Income Falls Short
According to the U.S. Census Bureau, three out of four women earn less than $40,000 a year. In part, women earn less than men because of time spent out of the workforce. Women frequently take time away to have children, raise families and increasingly, to care for aging parents.
At the same time, however, women are often paid less for the work they do, regardless of how long they're employed. According to the Women's Institute for a Secure Retirement (WISER), in 2007, women earned only $0.77 for every dollar on average, compared to men. That's a $300,000 loss over a career's lifetime!
Because retirement benefits are based on accumulated earnings during a working career, this "gender wage gap" quickly turns into a retirement wage gap. As such, WISER points out, women with pensions receive about half the amount men do, or $4,200 annually compared to $7,800 each year for a man.
The impact of this gap is multiplied by the fact that women typically live seven years longer than men. Add on the possibility of divorce or widowhood, in which women may lose out on a portion or all of their spouse's pension benefits, and women clearly head into retirement with far less wealth than men.
Risk Tolerance Is Low
When it comes to choosing how to invest retirement savings, every individual must decide which risk-return relationship is comfortable, but also ensures their financial goals are reached. A common mistake is to invest retirement assets too conservatively, thereby sacrificing long-term growth.
Investment history and theory have proved that higher returns are attained by taking on more risk. For women, being overly cautious with an investment strategy for retirement will only magnify the problems they already face as a result of lower lifetime incomes and longer life spans.
Figure 1, below, shows two retirement-savings scenarios comparing a conservative investment strategy with a more aggressive growth strategy.
Figure 1: Conservative vs. aggressive investing returns
The conservative investor is a 45-year-old woman making $40,000 a year. She has saved $35,000 and is adding another $200 per month into retirement savings. She invested her money conservatively for 20 years: 20% stocks, 50% bonds and 30% in short-term money market funds.
The aggressive investor is a woman with the same income, the same savings and the same time horizon, but she invested her money aggressively for 20 years: 85% stocks, 15% bonds and 0% in short-term funds.
By age 65, the conservative female investor saved $235,000 in retirement money, while the aggressive investor reached $352,000. As you can see, by taking on some additional risk and investing more in stocks, the aggressive investor created $117,000 more in retirement funds. Not considering taxes, if each woman lives to be 80.5 years (current life expectancy of women in the U.S. according to the CDC), the aggressive investor would have around $24,000 per year to live off of compared to the roughly $16,000 the conservative investor would have.
It's All In Your Mind
Psychological factors play a very important role in how women deal with money and investments. A review conducted by James Byrnes, David Miller and William Schafer (1999) of 150 psychological studies of risk-taking by men and women found that women generally perceive more risk, and are more risk-averse in situations ranging from health to the environment, public policy or finance.
The reasons for this risk-gender discrepancy are complex. Some studies suppose that women's greater responsibility in childbearing and reproduction leads to risk-aversion (J. LaBorde Witt, Journal of Women and Aging, 1994). Others point to the way women are raised. Regardless, most women can recount feelings of fear and intimidation when it comes to dealing with money and investments.
A recent analysis by John Watson and Mark McNaughton in the Financial Analysts Journal in July 2007 quantified the impact that risk-aversion has on women's projected retirement benefits. Controlling for age, income and education, the study concluded that women choose more conservative investment strategies, and that this is the primary reason why women can expect to have less retirement savings than men. The effect is compounded because women make less, retire earlier and live longer than men.
What's Next?
Women require more financial education to help them determine the appropriate risk, return and retirement strategies to meet their goals. A growing number of financial advisors, banks, and organizations have recognized this knowledge-gender gap and are creating education programs aimed specifically at women.
It's time for all women to take charge of their retirement savings. Seek out a financial advisor, an investor education materials and other resources that target the unique circumstances women face. Ask questions. Don't wait.Stephanie Loiacono, CFA, is a financial writer and analyst with 20 years of experience in investment management and research. She is currently writing a book, titled "Financial S.O.S. for Divorced Women."
Retirement wage gap is a big problem between men and women. Women usually take off of work for a period of time due to maternity leave. However, when they do come back and catch up on the time lost due to a baby in the family, they still come up short to their male counterparts. Female workers in the United States earn about $0.77 per every $1.00 that equal male workers make. Over the course of the working lifetime that is a difference of three hundred thousand dollars. Therefore, a disparity in the payrate between men and women in the workforce is translated into a disparity in the retirement wage between men and women.
This is a problem strategically in the United States. There are more and more women entering the workforce. Furthermore, there are more and more women graduating out of college every year. If this continues, there will be more and more disgruntled women employees throughout the United States. With women becoming a bigger and more prominent part of the workforce, if they decided to strike, it could lead to a huge situation in the United States economy.
With this problem becoming bigger everyday, the United States cannot continue to ignore this problem and make reparations starting today.
-----------------------------------------------------
Article: Overcome the Retirement “Gender Gap”
by Stephanie Loiacono
Wednesday, May 28, 2008
Many people won't save enough money for a comfortable retirement, but women have an even higher risk than men of coming up short when they stop working.
There are three key factors that have the greatest influence on retirement savings: income levels, risk tolerance and life expectancy. In each of these categories, women may hold the losing hand. Read on to learn why women fall behind on retirement savings and what they can do to catch up.
Income Falls Short
According to the U.S. Census Bureau, three out of four women earn less than $40,000 a year. In part, women earn less than men because of time spent out of the workforce. Women frequently take time away to have children, raise families and increasingly, to care for aging parents.
At the same time, however, women are often paid less for the work they do, regardless of how long they're employed. According to the Women's Institute for a Secure Retirement (WISER), in 2007, women earned only $0.77 for every dollar on average, compared to men. That's a $300,000 loss over a career's lifetime!
Because retirement benefits are based on accumulated earnings during a working career, this "gender wage gap" quickly turns into a retirement wage gap. As such, WISER points out, women with pensions receive about half the amount men do, or $4,200 annually compared to $7,800 each year for a man.
The impact of this gap is multiplied by the fact that women typically live seven years longer than men. Add on the possibility of divorce or widowhood, in which women may lose out on a portion or all of their spouse's pension benefits, and women clearly head into retirement with far less wealth than men.
Risk Tolerance Is Low
When it comes to choosing how to invest retirement savings, every individual must decide which risk-return relationship is comfortable, but also ensures their financial goals are reached. A common mistake is to invest retirement assets too conservatively, thereby sacrificing long-term growth.
Investment history and theory have proved that higher returns are attained by taking on more risk. For women, being overly cautious with an investment strategy for retirement will only magnify the problems they already face as a result of lower lifetime incomes and longer life spans.
Figure 1, below, shows two retirement-savings scenarios comparing a conservative investment strategy with a more aggressive growth strategy.
Figure 1: Conservative vs. aggressive investing returns
The conservative investor is a 45-year-old woman making $40,000 a year. She has saved $35,000 and is adding another $200 per month into retirement savings. She invested her money conservatively for 20 years: 20% stocks, 50% bonds and 30% in short-term money market funds.
The aggressive investor is a woman with the same income, the same savings and the same time horizon, but she invested her money aggressively for 20 years: 85% stocks, 15% bonds and 0% in short-term funds.
By age 65, the conservative female investor saved $235,000 in retirement money, while the aggressive investor reached $352,000. As you can see, by taking on some additional risk and investing more in stocks, the aggressive investor created $117,000 more in retirement funds. Not considering taxes, if each woman lives to be 80.5 years (current life expectancy of women in the U.S. according to the CDC), the aggressive investor would have around $24,000 per year to live off of compared to the roughly $16,000 the conservative investor would have.
It's All In Your Mind
Psychological factors play a very important role in how women deal with money and investments. A review conducted by James Byrnes, David Miller and William Schafer (1999) of 150 psychological studies of risk-taking by men and women found that women generally perceive more risk, and are more risk-averse in situations ranging from health to the environment, public policy or finance.
The reasons for this risk-gender discrepancy are complex. Some studies suppose that women's greater responsibility in childbearing and reproduction leads to risk-aversion (J. LaBorde Witt, Journal of Women and Aging, 1994). Others point to the way women are raised. Regardless, most women can recount feelings of fear and intimidation when it comes to dealing with money and investments.
A recent analysis by John Watson and Mark McNaughton in the Financial Analysts Journal in July 2007 quantified the impact that risk-aversion has on women's projected retirement benefits. Controlling for age, income and education, the study concluded that women choose more conservative investment strategies, and that this is the primary reason why women can expect to have less retirement savings than men. The effect is compounded because women make less, retire earlier and live longer than men.
What's Next?
Women require more financial education to help them determine the appropriate risk, return and retirement strategies to meet their goals. A growing number of financial advisors, banks, and organizations have recognized this knowledge-gender gap and are creating education programs aimed specifically at women.
It's time for all women to take charge of their retirement savings. Seek out a financial advisor, an investor education materials and other resources that target the unique circumstances women face. Ask questions. Don't wait.Stephanie Loiacono, CFA, is a financial writer and analyst with 20 years of experience in investment management and research. She is currently writing a book, titled "Financial S.O.S. for Divorced Women."
Entry # 19 20600331
My Opinion/Summary:
Yahoo has experienced decline and stagnation over the past couple of years. Icahn, wants to replace the current board of directors and put into place himself and others. This is a good idea because Yahoo has been a decline for the past few years. To add to this problem, Google a competitor has grew tremendously. I believe this is a sound strategic plan because the current board has done nothing or could do nothing to change the current outcome, it may be time to change the board. If something is not working, it is never a good idea to continue on that path and hope that it will somehow find the right answer. However, I do not believe that Icahn’s actions though well intended for Yahoo were the right course of action. A more level-headed cooled approach may appeal to more investors in Yahoo to make the switch from the current board to the new one. Currently, Yahoo has posted an injunction to try and stop Icahn’s plan.
-----------------------------------
ReutersIcahn trashes Yahoo for failed growth plan
Monday June 9, 2:34 pm ET
NEW YORK (Reuters) - Carl Icahn on Monday fired off another letter savaging the board and management of Yahoo Inc (NasdaqGS:YHOO - News) for failing in its growth plan, the latest volley in an escalating proxy battle the billionaire investor has staged at the Internet company.
Icahn -- who is seeking to replace the board of Yahoo with his own nominees, including himself -- took aim at Yahoo CEO Jerry Yang, saying he has failed to come up with a suitable plan to beat back rivals including Google Inc (NasdaqGS:GOOG - News).
"While Google's income from operations grew 59 percent per year for the last two years, Yahoo's income from operations shrank 21 percent," Icahn said in his latest salvo to Yahoo Chairman Roy Bostock.
"What was the board doing over this period? Where was their great plan? Why did you permit Google to leave you in the dust?" Icahn asked.
Later on Monday, Yahoo filed its proxy statement for its August 1 shareholder meeting with the U.S. Securities and Exchange Commission.
The Web company urged shareholders to reelect the current board of directors, including Bostock and Yang, and reject Icahn's slate.
Yahoo also said in the filing it expects to foot $12 million in proxy solicitation costs.
Shares of Yahoo were down 6 cents at $26.38 in afternoon trading on the Nasdaq.
(Reporting by Dane Hamilton and Anupreeta Das, editing by Mark Porter and Gerald E. McCormick)
Yahoo has experienced decline and stagnation over the past couple of years. Icahn, wants to replace the current board of directors and put into place himself and others. This is a good idea because Yahoo has been a decline for the past few years. To add to this problem, Google a competitor has grew tremendously. I believe this is a sound strategic plan because the current board has done nothing or could do nothing to change the current outcome, it may be time to change the board. If something is not working, it is never a good idea to continue on that path and hope that it will somehow find the right answer. However, I do not believe that Icahn’s actions though well intended for Yahoo were the right course of action. A more level-headed cooled approach may appeal to more investors in Yahoo to make the switch from the current board to the new one. Currently, Yahoo has posted an injunction to try and stop Icahn’s plan.
-----------------------------------
ReutersIcahn trashes Yahoo for failed growth plan
Monday June 9, 2:34 pm ET
NEW YORK (Reuters) - Carl Icahn on Monday fired off another letter savaging the board and management of Yahoo Inc (NasdaqGS:YHOO - News) for failing in its growth plan, the latest volley in an escalating proxy battle the billionaire investor has staged at the Internet company.
Icahn -- who is seeking to replace the board of Yahoo with his own nominees, including himself -- took aim at Yahoo CEO Jerry Yang, saying he has failed to come up with a suitable plan to beat back rivals including Google Inc (NasdaqGS:GOOG - News).
"While Google's income from operations grew 59 percent per year for the last two years, Yahoo's income from operations shrank 21 percent," Icahn said in his latest salvo to Yahoo Chairman Roy Bostock.
"What was the board doing over this period? Where was their great plan? Why did you permit Google to leave you in the dust?" Icahn asked.
Later on Monday, Yahoo filed its proxy statement for its August 1 shareholder meeting with the U.S. Securities and Exchange Commission.
The Web company urged shareholders to reelect the current board of directors, including Bostock and Yang, and reject Icahn's slate.
Yahoo also said in the filing it expects to foot $12 million in proxy solicitation costs.
Shares of Yahoo were down 6 cents at $26.38 in afternoon trading on the Nasdaq.
(Reporting by Dane Hamilton and Anupreeta Das, editing by Mark Porter and Gerald E. McCormick)
Entry # 18 20600331
My Opinion/Summary:
Underinsured Americans and uninsured Americans have been the norm in the United States and have increased since 2001. This is not a good strategic plan for the United States. Families in all income levels have increase in the number of those families who were either underinsured or uninsured. One big problem is the percent increase in the cost of the premium for these coverages. The percentage increase since 2001 has been seventy-eight percent. However, the wage increase among workers in America has only been seventeen percent, meanwhile, inflation over the past seven years has been seventeen percent.
Another problem that they are facing is that just because someone owns health coverage; it does not mean that all of the medical costs would be covered. Plans like the HMO and others in the United States have failed the public so many times that the American public does not trust the insurance companies anymore.
Health costs that have been the burden of employers are now being felt more and more by employees. With health care plans offered by employers becoming more and more limited, angrier employees and more disgruntled employees may surface. This also leads to the problem of underinsured Americans.
Therefore, the United States must act and put in policy that would allow Americans to become more and more adequately insured.
------------------------------------------------------------
MarketWatch
Millions with insurance still face serious financial, health risk
Thursday June 12, 1:30 pm ET
By Kristen Gerencher
Number of underinsured up 60% last year vs. 2003, study finds
Despite the U.S. economy's growth in the last five years, the number of people with health insurance who face high out-of-pocket medical expenses relative to their incomes has risen sharply since 2003, according to a new study.
More than 25 million working-age Americans were underinsured last year, up 60% from the 16 million who had inadequate coverage in 2003, according to a report from the Commonwealth Fund, a private foundation in New York. The rate of underinsurance nearly tripled among middle- and higher-income families, those with at least $40,000 in family income.
"Lack of insurance is only one part of the problem, as even the insured have serious gaps in coverage," said Karen Davis, president of the Commonwealth Fund. "Insurance coverage is the ticket into the health-care system, but for too many, that ticket doesn't buy financial security or genuine access to care."
The upward trend in the underinsured rate reflects how much rising health-care costs have outpaced wage gains. Premiums for family coverage have jumped 78% since 2001, while wages have risen 19% and general inflation has gone up 17% in that time, according to the Kaiser Family Foundation.
Researchers considered people who had coverage all year long underinsured if they had out-of-pocket medical, prescription, dental and vision expenses that amounted to 10% or more of their total household income, or 5% if they were low income. People who had deductibles equal to or greater than 5% of their income also qualified as underinsured because of their potential financial exposure.
During 2007, 42% of adults, or 75 million people, were either uninsured or underinsured, up from one-third in 2003, according to the study of 2,616 people ages 19 to 64. It was published online Tuesday in the journal Health Affairs.
Similar patterns to uninsured
Employers burdened by rapidly rising health-care costs have been shifting more of those costs to workers or limiting benefits, the study found. The underinsured were more likely to have individual or small-group coverage, and those with employer-based health insurance were more likely to work in low-wage jobs or at small firms than their adequately insured counterparts. What's more, the underinsured were more likely to report paying high deductibles and many paid high annual premiums.
The underinsured often resembled the uninsured more so than the insured in their health-care choices and experiences. More than half of the underinsured -- 53% -- and 68% of the uninsured avoided needed care because of cost, compared with 31% of the adequately insured who went without, the study found. That includes not seeing a doctor when sick, not filling prescriptions and not getting recommended diagnostic tests or treatments.
About 45% of the underinsured reported difficulty paying medical bills, being contacted by collection agencies or changing their way of life to keep up on health-care payments, just shy of the 51% of uninsured who said the same.
In the U.S., even people with health insurance can rack up medical debt or face bankruptcy, said Cathy Schoen, senior vice president of the Commonwealth Fund. "As a nation we are losing ground. We need to move in new directions."
Leon Rousso, a certified financial planner in Ventura, Calif., who sells health insurance as part of his business, said he tries to place moderate-income people in health plans that have a sensible annual out-of-pocket maximum and reasonable coverage for their biggest potential out-of-pocket costs. Sometimes that means moving them to a higher deductible plan in exchange for lower premiums.
Of course, many people have to take whatever their employer offers them, he said.
Insured people "don't really have a lot of clout," Rousso said. "Middle to lower middle class, that's really where the vulnerable spot is. You see a lot of people who don't have a lot of money."
Those who shop for their own plan are wise to look for coverage of big-ticket items. Rousso advised focusing on financial protection for hospitalization charges and prescription drugs.
"Those are the biggest places to lose your fortune," he said. "It's all about protecting your assets."
Many of the underinsured are in scaled-down, more affordable health plans, said Nancy Davenport-Ennis, chief executive of the nonprofit Patient Advocate Foundation in Newport News, Va. The group tries to help people with chronic, debilitating and life-threatening conditions get the care they need, with 78% of its annual cases involving cancer patients.
"We actually found that an underinsured consumer has a tougher time getting to resources than a completely uninsured consumer," she said.
The underinsured are often in plans that have limits such as dollar caps on diagnoses and specific services and restrictions on the number and kind of drugs covered, which can undercut the kind of aggressive care many cancer patients count on, Davenport-Ennis said.
"In affordable plans, it's almost standard to see a cap on the number of radiation visits you can have a year - somewhere between 12 and 15 -- while most cancer therapies that have radiation as part of the treatment protocol historically require six consecutive weeks of daily treatments," she said. "If you're capped at 12, you're going to be a private-pay person for the next 18."
The Patient Advocate Foundation offers free case management for health-insurance issues of the seriously ill. Its hotline is 1-800-532-5274 .
Controversy over cost controls
The U.S. spends enough on health care -- 16% of its gross domestic product -- to extend adequate health insurance to all, said Alan Sager, a health policy and management professor at Boston University's School of Public Health.
"It's something everyone wants and deserves, and crafting durably affordable health care is essential to rebuilding the economy," he said.
"If we continue to accelerate toward the cliff, we'll be spending more money on care but will have more uninsured and underinsured people, which means hospitals and doctors will work harder to overserve those of us who still have good insurance."
In Massachusetts, a statewide reform law passed in 2006 that aimed to cover all residents "took an important step" but introduced new tensions, he said, especially around politically palatable cost-control methods. Many of the ones currently in vogue in national politics as well won't do the trick, Sager said.
"The ideas that are under widespread political discussion -- electronic medical records, prevention, chronic-care case management or deinsuring patients so they will be more motivated to shop by price and quality -- none of these things will work to contain costs," Sager said. "They're all being pushed because they offer the shallow political promise of containing costs without actually disrupting business as usual in health care. Business as usual in health care means regular, large infusions of more money every year."
Still, Sager said he's optimistic that the next five years will bring major improvements in the nation's health-care system.
"We all know we're medically vulnerable because none of us is going to live forever, but as more of us realize that we're also financially vulnerable, we'll demand change and [solutions] that work financially, medically, ethically and politically."
Underinsured Americans and uninsured Americans have been the norm in the United States and have increased since 2001. This is not a good strategic plan for the United States. Families in all income levels have increase in the number of those families who were either underinsured or uninsured. One big problem is the percent increase in the cost of the premium for these coverages. The percentage increase since 2001 has been seventy-eight percent. However, the wage increase among workers in America has only been seventeen percent, meanwhile, inflation over the past seven years has been seventeen percent.
Another problem that they are facing is that just because someone owns health coverage; it does not mean that all of the medical costs would be covered. Plans like the HMO and others in the United States have failed the public so many times that the American public does not trust the insurance companies anymore.
Health costs that have been the burden of employers are now being felt more and more by employees. With health care plans offered by employers becoming more and more limited, angrier employees and more disgruntled employees may surface. This also leads to the problem of underinsured Americans.
Therefore, the United States must act and put in policy that would allow Americans to become more and more adequately insured.
------------------------------------------------------------
MarketWatch
Millions with insurance still face serious financial, health risk
Thursday June 12, 1:30 pm ET
By Kristen Gerencher
Number of underinsured up 60% last year vs. 2003, study finds
Despite the U.S. economy's growth in the last five years, the number of people with health insurance who face high out-of-pocket medical expenses relative to their incomes has risen sharply since 2003, according to a new study.
More than 25 million working-age Americans were underinsured last year, up 60% from the 16 million who had inadequate coverage in 2003, according to a report from the Commonwealth Fund, a private foundation in New York. The rate of underinsurance nearly tripled among middle- and higher-income families, those with at least $40,000 in family income.
"Lack of insurance is only one part of the problem, as even the insured have serious gaps in coverage," said Karen Davis, president of the Commonwealth Fund. "Insurance coverage is the ticket into the health-care system, but for too many, that ticket doesn't buy financial security or genuine access to care."
The upward trend in the underinsured rate reflects how much rising health-care costs have outpaced wage gains. Premiums for family coverage have jumped 78% since 2001, while wages have risen 19% and general inflation has gone up 17% in that time, according to the Kaiser Family Foundation.
Researchers considered people who had coverage all year long underinsured if they had out-of-pocket medical, prescription, dental and vision expenses that amounted to 10% or more of their total household income, or 5% if they were low income. People who had deductibles equal to or greater than 5% of their income also qualified as underinsured because of their potential financial exposure.
During 2007, 42% of adults, or 75 million people, were either uninsured or underinsured, up from one-third in 2003, according to the study of 2,616 people ages 19 to 64. It was published online Tuesday in the journal Health Affairs.
Similar patterns to uninsured
Employers burdened by rapidly rising health-care costs have been shifting more of those costs to workers or limiting benefits, the study found. The underinsured were more likely to have individual or small-group coverage, and those with employer-based health insurance were more likely to work in low-wage jobs or at small firms than their adequately insured counterparts. What's more, the underinsured were more likely to report paying high deductibles and many paid high annual premiums.
The underinsured often resembled the uninsured more so than the insured in their health-care choices and experiences. More than half of the underinsured -- 53% -- and 68% of the uninsured avoided needed care because of cost, compared with 31% of the adequately insured who went without, the study found. That includes not seeing a doctor when sick, not filling prescriptions and not getting recommended diagnostic tests or treatments.
About 45% of the underinsured reported difficulty paying medical bills, being contacted by collection agencies or changing their way of life to keep up on health-care payments, just shy of the 51% of uninsured who said the same.
In the U.S., even people with health insurance can rack up medical debt or face bankruptcy, said Cathy Schoen, senior vice president of the Commonwealth Fund. "As a nation we are losing ground. We need to move in new directions."
Leon Rousso, a certified financial planner in Ventura, Calif., who sells health insurance as part of his business, said he tries to place moderate-income people in health plans that have a sensible annual out-of-pocket maximum and reasonable coverage for their biggest potential out-of-pocket costs. Sometimes that means moving them to a higher deductible plan in exchange for lower premiums.
Of course, many people have to take whatever their employer offers them, he said.
Insured people "don't really have a lot of clout," Rousso said. "Middle to lower middle class, that's really where the vulnerable spot is. You see a lot of people who don't have a lot of money."
Those who shop for their own plan are wise to look for coverage of big-ticket items. Rousso advised focusing on financial protection for hospitalization charges and prescription drugs.
"Those are the biggest places to lose your fortune," he said. "It's all about protecting your assets."
Many of the underinsured are in scaled-down, more affordable health plans, said Nancy Davenport-Ennis, chief executive of the nonprofit Patient Advocate Foundation in Newport News, Va. The group tries to help people with chronic, debilitating and life-threatening conditions get the care they need, with 78% of its annual cases involving cancer patients.
"We actually found that an underinsured consumer has a tougher time getting to resources than a completely uninsured consumer," she said.
The underinsured are often in plans that have limits such as dollar caps on diagnoses and specific services and restrictions on the number and kind of drugs covered, which can undercut the kind of aggressive care many cancer patients count on, Davenport-Ennis said.
"In affordable plans, it's almost standard to see a cap on the number of radiation visits you can have a year - somewhere between 12 and 15 -- while most cancer therapies that have radiation as part of the treatment protocol historically require six consecutive weeks of daily treatments," she said. "If you're capped at 12, you're going to be a private-pay person for the next 18."
The Patient Advocate Foundation offers free case management for health-insurance issues of the seriously ill. Its hotline is 1-800-532-5274 .
Controversy over cost controls
The U.S. spends enough on health care -- 16% of its gross domestic product -- to extend adequate health insurance to all, said Alan Sager, a health policy and management professor at Boston University's School of Public Health.
"It's something everyone wants and deserves, and crafting durably affordable health care is essential to rebuilding the economy," he said.
"If we continue to accelerate toward the cliff, we'll be spending more money on care but will have more uninsured and underinsured people, which means hospitals and doctors will work harder to overserve those of us who still have good insurance."
In Massachusetts, a statewide reform law passed in 2006 that aimed to cover all residents "took an important step" but introduced new tensions, he said, especially around politically palatable cost-control methods. Many of the ones currently in vogue in national politics as well won't do the trick, Sager said.
"The ideas that are under widespread political discussion -- electronic medical records, prevention, chronic-care case management or deinsuring patients so they will be more motivated to shop by price and quality -- none of these things will work to contain costs," Sager said. "They're all being pushed because they offer the shallow political promise of containing costs without actually disrupting business as usual in health care. Business as usual in health care means regular, large infusions of more money every year."
Still, Sager said he's optimistic that the next five years will bring major improvements in the nation's health-care system.
"We all know we're medically vulnerable because none of us is going to live forever, but as more of us realize that we're also financially vulnerable, we'll demand change and [solutions] that work financially, medically, ethically and politically."
Entry # 17 20600331
My Opinion/Summary:
Retirement at a later age in the United States seems like an unavoidable fact. With social security running out and retirement plans and pensions not being sufficient, workers in the United States have had to work longer throughout their lives. With all of the numbers increase over the past two decades, older workers is the future workers of America. This may actually be a great strategic initiative for the United States to get out of the recession that is currently plaguing the economy. First, if more workers are working because they have to retire at a later age, then there would be more productivity in the United States overall. Too many people retired would leave too much stagnant money in the pockets of those individuals. However, if they continue to work, money could continually circulate throughout the United States economy and thus jumpstart the economy.
Second, studies have shown that older employees are less likely to change workplaces. Finding another job elsewhere is something that older people do not enjoy doing and would prefer to stay at their current place of employment. Companies that employ more older employees have seen a dramatic decrease in their employee turnover ratio. This in turn allows them to save more money by not spending more time training new employees.
Third, certain business industries have seen more customer loyalty due to employment of older workers. Bookstores and other businesses that have customers that are older have enjoyed their shopping experience more because of the age level of the employees.
-----------------------------------------------
Article: Older Staffers Get Uneasy Embrace
by David Wessel
Thursday, May 15, 2008
Americans are going to have to retire later, we're often told. They live longer than their ancestors. Neither their retirement savings nor the taxes of younger generations can support ever-longer retirements.
Americans are, in fact, working longer, reversing a long trend toward earlier retirement.
The nation's typical worker now retires at age 62, up from 60 a decade ago, according to the Employee Benefit Research Institute. About 60% of men between 60 and 64 are in the labor force, and 20% of men over 65, up from 55% and 17%, respectively, a decade ago, says the Bureau of Labor Statistics. The pattern is similar for women.
But will employers want more older workers?
"There's a lot of happy talk around that we're going to have slowing in the rate of growth in young workers and, therefore, employers are going to want to hire older workers just at the time that older workers are going to want to work," says Boston College economist Alicia Munnell, co-author of "Working Longer," a book to be published this month by the Brookings Institution. "We think it's much less clear than that."
The "happy talk" case relies on the demographic fact that the ranks of prime-age workers will shrink as the huge baby boom generation ages and on the logic that employers will have no alternative to older workers. Plus, today's jobs require less of the physical stamina that led to mandatory retirement ages, changes in pension plans have diluted economic incentives for employers to encourage retirement, and age discrimination was banned in 1967.
A significant minority of employers see this demographic reality, broadcast affection for "mature workers" and win plaudits from AARP, an advocacy group for older people.
CVS Caremark, the drugstore chain, advertises for older workers with the slogan: "Abilities are ageless." Of its 190,000 employees, 18% are over 50, up from 7% in the early 1990s. More than 1,200 snowbirds, mainly older workers, work at CVS in the north in the summer and in Florida in the winter.
Bookstore chain Borders Group says it finds "mature workers" appealing because half its customers are over 45 and turnover among older workers is one- sixth that of under-30 workers. About 18% of Borders' 30,000 workers are over 50, double the fraction six years ago, and the company anticipates by 2010 one in four will be.
At the Blue Cross Blue Shield Association in Chicago, 40% of 1,000 mainly professional employees are 50 or older and 25% are 55 or older. "We want to keep these people as long as we can. They know the business, the values, the customs. And recruitment is becoming more difficult," says William Colbourne, senior vice president for human resources. The trade association has sweetened benefits for older workers, paying half the tab for financial planning and awarding extra days off to those 62 and over. It soon will offer part-time work at full-time pay to selected workers who agree to defer retirement and mentor successors, Mr. Colbourne said.
For all the heart-warming pictures such efforts produce, they appear to be exceptions. Buyouts of graying colleagues and early-retirement parties are common in many workplaces. "Relatively few companies thus far have fully positioned themselves for the coming work-force demographic shifts," consulting firm Towers Perrin said in a 2005 report prepared for AARP.
Surveys by Boston College's Center for Retirement Research found that employers expect about a quarter of employees currently in their 50s will want to work two to four years longer than past workers. Then employers were asked if they would accommodate half those who wanted to work later. "On a scale of 1 (unlikely) to 10 (likely), the median response was a lukewarm 6," the researchers say.
While employers are "reasonably comfortable" with the older workers they currently employ, "they are not keen on retaining even half who want to stay on to age 67 or 69," the Boston researchers concluded. They predict "a messy and uncomfortable mismatch with large numbers of older workers wanting to stay on while employers prefer that they do not."
Why? Employers fear older workers "cost too much, lack current skills and don't stick around long," Ms. Munnell and co-author Steven Sass write. Wages tend to rise with seniority. Health costs for older workers are higher. Older workers are viewed, rightly or not, as less supple in dealing with new technologies. And old workers tend to be in older industries and occupations in which employment is growing slowly if at all.
The image of companies loyally retaining scarce, seasoned workers is at odds with reality. Among male workers between 58 and 62, only 44% still work for the outfit that employed them at 50, down from 70% two decades ago. And even if labor shortages emerge, they argue, many employers will hire younger immigrants, shift work overseas or deploy labor-saving technology (like the cashier-less grocery-store checkout) instead of hiring older workers.
One silver lining: Lengthening life spans don't mean you have to find a boss who will let you work forever. The Boston College scholars say delaying retirement three or four years -- to 66, instead of 62, say -- will boost retirement income by a third.
Copyrighted, Dow Jones & Company, Inc. All rights reserved.
Retirement at a later age in the United States seems like an unavoidable fact. With social security running out and retirement plans and pensions not being sufficient, workers in the United States have had to work longer throughout their lives. With all of the numbers increase over the past two decades, older workers is the future workers of America. This may actually be a great strategic initiative for the United States to get out of the recession that is currently plaguing the economy. First, if more workers are working because they have to retire at a later age, then there would be more productivity in the United States overall. Too many people retired would leave too much stagnant money in the pockets of those individuals. However, if they continue to work, money could continually circulate throughout the United States economy and thus jumpstart the economy.
Second, studies have shown that older employees are less likely to change workplaces. Finding another job elsewhere is something that older people do not enjoy doing and would prefer to stay at their current place of employment. Companies that employ more older employees have seen a dramatic decrease in their employee turnover ratio. This in turn allows them to save more money by not spending more time training new employees.
Third, certain business industries have seen more customer loyalty due to employment of older workers. Bookstores and other businesses that have customers that are older have enjoyed their shopping experience more because of the age level of the employees.
-----------------------------------------------
Article: Older Staffers Get Uneasy Embrace
by David Wessel
Thursday, May 15, 2008
Americans are going to have to retire later, we're often told. They live longer than their ancestors. Neither their retirement savings nor the taxes of younger generations can support ever-longer retirements.
Americans are, in fact, working longer, reversing a long trend toward earlier retirement.
The nation's typical worker now retires at age 62, up from 60 a decade ago, according to the Employee Benefit Research Institute. About 60% of men between 60 and 64 are in the labor force, and 20% of men over 65, up from 55% and 17%, respectively, a decade ago, says the Bureau of Labor Statistics. The pattern is similar for women.
But will employers want more older workers?
"There's a lot of happy talk around that we're going to have slowing in the rate of growth in young workers and, therefore, employers are going to want to hire older workers just at the time that older workers are going to want to work," says Boston College economist Alicia Munnell, co-author of "Working Longer," a book to be published this month by the Brookings Institution. "We think it's much less clear than that."
The "happy talk" case relies on the demographic fact that the ranks of prime-age workers will shrink as the huge baby boom generation ages and on the logic that employers will have no alternative to older workers. Plus, today's jobs require less of the physical stamina that led to mandatory retirement ages, changes in pension plans have diluted economic incentives for employers to encourage retirement, and age discrimination was banned in 1967.
A significant minority of employers see this demographic reality, broadcast affection for "mature workers" and win plaudits from AARP, an advocacy group for older people.
CVS Caremark, the drugstore chain, advertises for older workers with the slogan: "Abilities are ageless." Of its 190,000 employees, 18% are over 50, up from 7% in the early 1990s. More than 1,200 snowbirds, mainly older workers, work at CVS in the north in the summer and in Florida in the winter.
Bookstore chain Borders Group says it finds "mature workers" appealing because half its customers are over 45 and turnover among older workers is one- sixth that of under-30 workers. About 18% of Borders' 30,000 workers are over 50, double the fraction six years ago, and the company anticipates by 2010 one in four will be.
At the Blue Cross Blue Shield Association in Chicago, 40% of 1,000 mainly professional employees are 50 or older and 25% are 55 or older. "We want to keep these people as long as we can. They know the business, the values, the customs. And recruitment is becoming more difficult," says William Colbourne, senior vice president for human resources. The trade association has sweetened benefits for older workers, paying half the tab for financial planning and awarding extra days off to those 62 and over. It soon will offer part-time work at full-time pay to selected workers who agree to defer retirement and mentor successors, Mr. Colbourne said.
For all the heart-warming pictures such efforts produce, they appear to be exceptions. Buyouts of graying colleagues and early-retirement parties are common in many workplaces. "Relatively few companies thus far have fully positioned themselves for the coming work-force demographic shifts," consulting firm Towers Perrin said in a 2005 report prepared for AARP.
Surveys by Boston College's Center for Retirement Research found that employers expect about a quarter of employees currently in their 50s will want to work two to four years longer than past workers. Then employers were asked if they would accommodate half those who wanted to work later. "On a scale of 1 (unlikely) to 10 (likely), the median response was a lukewarm 6," the researchers say.
While employers are "reasonably comfortable" with the older workers they currently employ, "they are not keen on retaining even half who want to stay on to age 67 or 69," the Boston researchers concluded. They predict "a messy and uncomfortable mismatch with large numbers of older workers wanting to stay on while employers prefer that they do not."
Why? Employers fear older workers "cost too much, lack current skills and don't stick around long," Ms. Munnell and co-author Steven Sass write. Wages tend to rise with seniority. Health costs for older workers are higher. Older workers are viewed, rightly or not, as less supple in dealing with new technologies. And old workers tend to be in older industries and occupations in which employment is growing slowly if at all.
The image of companies loyally retaining scarce, seasoned workers is at odds with reality. Among male workers between 58 and 62, only 44% still work for the outfit that employed them at 50, down from 70% two decades ago. And even if labor shortages emerge, they argue, many employers will hire younger immigrants, shift work overseas or deploy labor-saving technology (like the cashier-less grocery-store checkout) instead of hiring older workers.
One silver lining: Lengthening life spans don't mean you have to find a boss who will let you work forever. The Boston College scholars say delaying retirement three or four years -- to 66, instead of 62, say -- will boost retirement income by a third.
Copyrighted, Dow Jones & Company, Inc. All rights reserved.
Entry # 16 20600331
My Opinion/Summary:
The economic downturn in the United States has hit men hard over the past few years. What is interesting is that this same economy has been able to hire women at an alarming rate. This is in part because the part of the economy that is in recession is the part in which men are more of the workforce than women. The manufacturing and construction portion of the economy is being hit hard while health professional and education sections of the economy are not. Men however, shy away from such positions in the economy. From jobs that range from teachers to nurses, men have traditionally viewed those jobs as those that are done by women. This is not a good strategic viewpoint in part of the men. By reinvesting their time and efforts into such fields, they could still continue to work and be hired in alarming rates. Furthermore, the recession may not hit the United States workforce as hard as it did. With gender roles changing within the United States culture, this change in job view may change.
However, with this solution, men would have to change their instinctual tendencies. It has been noted that men work better in settings where there is a clear hierarchical setting while women have flourished in fields that are viewed to require sensitivity and collaborative work. Again, this is not a good strategic viewpoint in the minds of United States men and unless this changes, we may face another and even harsher recession or depression in the near future.
-------------------------------------------------------
Article: The Slump: It’s a Guy Thing
by Peter CoyMonday, May 12, 2008provided by
Men, concentrated in the weakest sectors, are losing jobs in this downturn, while women make gains
They eat from the same dishes and sleep in the same beds, but they seem to be operating in two different economies. From last November through this April, American women aged 20 and up gained nearly 300,000 jobs, according to the household survey of the Bureau of Labor Statistics (BLS). At the same time, American men lost nearly 700,000 jobs. You might even say American men are in recession, and American women are not.
What's going on? Simply put, men have the misfortune of being concentrated in the two sectors that are doing the worst: manufacturing and construction. Women are concentrated in sectors that are still growing, such as education and health care.
This situation is hardly good news for women, though. While they're getting more jobs, their pay is stagnant. Also, most share households—and bills—with the men who are losing jobs. And the "female" economy can't stay strong for long if the "male" economy weakens too much.
The troubles for the American male worker, while exacerbated by the current slump, are hardly new. The manufacturing sector is in long-term decline, and construction goes through repeated booms and busts. Meanwhile women are graduating from college at higher rates than men. Some analysts even argue that men are less suited than women to the knowledge economy, which rewards supposedly female traits such as sensitivity, intuition, and a willingness to collaborate. "Men have tended to do better in the hierarchies, following orders and relying on positional power," says Andy Hines, a futurist at the Washington (D.C.) consulting firm Social Technologies, who previously worked for Kellogg and Dow Chemical.
Problem Industries
Whether you buy that argument or not, it's clear that right now men are in a bad spot. The share of all men aged 20 and over with jobs has fallen since last November, when private-sector employment peaked, going from 72.9% to 72.2% in April. For women the ratio rose, from 58.1% to 58.3%. The adult male unemployment rate has risen twice as much as the female jobless rate since November. Those figures from the BLS' household survey are echoed in its separate survey of employers.
To see why, go sector by sector. Manufacturing is over 70% male and construction is about 88% male. Meanwhile the growing education and health services sector is 77% female. The government sector, which has remained strong, is 57% female. The securities business, which is filled with high-paying jobs, is likely to be the next sector to get whacked—and more than 60% of its workers are men.
Men are having a harder time than women getting back on track after losing a job. "For a man to move from a $20- or $30-an-hour union job to being a Wal-Mart greeter is devastating," says Claudia Goldin, a Harvard University labor historian. Men also shy away from some of the growing fields, such as nursing. Only about 10% of nursing students nationwide are male, notes Harriet R. Feldman, dean of the Pace University School of Nursing. Some retired nurses are actually going back to work because their husbands have lost jobs, says Lois Cooper, vice-president for employee relations and diversity at staffing firm Adecco Group North America in Melville, N.Y.
The weakness of the male economy is squeezing people such as Brian Day, 45, a union carpenter in Ossian, Ind., who made about $35,000 in construction last year but only $1,500 so far in 2008. The family of five is living off his jobless benefits and the $35,000 salary of his wife, a supermarket supervisor. Says Day: "I feel guilty about it." Jeff Bainter, 53, a railroad worker in Muncie, Ind., has enough seniority to keep his job but sees younger men getting the ax. He says there's more security but lower pay in what his wife, Cynthiana, does for a living: medical billing.
Stubborn Pay Gap
The Presidential candidates haven't figured out how to play the disparity between men and women. In BusinessWeek interviews, advisers for all three said they want to help everyone. Austan Goolsbee, chief economic adviser to Senator Barack Obama, said: "Because the unemployed are disproportionately men, they may especially benefit from Obama's program to get us out of recession. But gender has nothing to do with the policy's design." Senator Hillary Clinton's economic policy director, Brian Deese, said: "The goal is not to appeal to men more than women."
One reason for the candidates to tread lightly is that even though men have done worse on jobs lately, they continue to earn more than women on average. Over three-quarters of people who earned over $100,000 last year were men, says Queens College political scientist Andrew Hacker. In fact, although the pay gap between men and women has been gradually narrowing, it actually widened a bit over the past year. Median usual weekly earnings for men grew 4.6% from the first quarter of 2007 through the first quarter of 2008, vs. 3.1% for women.
That might be evidence that the jobs women are landing aren't necessarily good ones. Says Eileen Appelbaum, director of Rutgers University's Center for Women & Work: "We had an expansion of jobs for home health aides, retail clerks, child-care workers. They're low-wage, they're dead-end, and they don't have any benefits."
Another reason politicians aren't making hay of the plight of males is that they are well aware that women are in no mood for it. Working-class and lower-middle-class women in particular, whether or not their men have jobs, are feeling economically stressed, says Bill McInturff, a pollster for Senator John McCain. He adds, "In focus groups they talk about how 'I'm taking care of my parents, his parents, buying groceries, taking kids to the doctor.' These women are tired."
There's no easy remedy for what ails the male economy. Edward J. O'Boyle, senior research associate at the Mayo Research Institute in West Monroe, La., says part of the solution is reviving manufacturing—a gargantuan task. On construction, he favors financial reforms to even out the booms and busts.
Economists are debating whether the overall economy is in a recession. For men, the evidence is clear.
With Maggie Gilmour and Jing Zhou in Chicago and Jane Sasseen in Washington, D.C.
Coy is BusinessWeek's Economics editor.
Copyrighted, Business Week. All rights reserved.
The economic downturn in the United States has hit men hard over the past few years. What is interesting is that this same economy has been able to hire women at an alarming rate. This is in part because the part of the economy that is in recession is the part in which men are more of the workforce than women. The manufacturing and construction portion of the economy is being hit hard while health professional and education sections of the economy are not. Men however, shy away from such positions in the economy. From jobs that range from teachers to nurses, men have traditionally viewed those jobs as those that are done by women. This is not a good strategic viewpoint in part of the men. By reinvesting their time and efforts into such fields, they could still continue to work and be hired in alarming rates. Furthermore, the recession may not hit the United States workforce as hard as it did. With gender roles changing within the United States culture, this change in job view may change.
However, with this solution, men would have to change their instinctual tendencies. It has been noted that men work better in settings where there is a clear hierarchical setting while women have flourished in fields that are viewed to require sensitivity and collaborative work. Again, this is not a good strategic viewpoint in the minds of United States men and unless this changes, we may face another and even harsher recession or depression in the near future.
-------------------------------------------------------
Article: The Slump: It’s a Guy Thing
by Peter CoyMonday, May 12, 2008provided by
Men, concentrated in the weakest sectors, are losing jobs in this downturn, while women make gains
They eat from the same dishes and sleep in the same beds, but they seem to be operating in two different economies. From last November through this April, American women aged 20 and up gained nearly 300,000 jobs, according to the household survey of the Bureau of Labor Statistics (BLS). At the same time, American men lost nearly 700,000 jobs. You might even say American men are in recession, and American women are not.
What's going on? Simply put, men have the misfortune of being concentrated in the two sectors that are doing the worst: manufacturing and construction. Women are concentrated in sectors that are still growing, such as education and health care.
This situation is hardly good news for women, though. While they're getting more jobs, their pay is stagnant. Also, most share households—and bills—with the men who are losing jobs. And the "female" economy can't stay strong for long if the "male" economy weakens too much.
The troubles for the American male worker, while exacerbated by the current slump, are hardly new. The manufacturing sector is in long-term decline, and construction goes through repeated booms and busts. Meanwhile women are graduating from college at higher rates than men. Some analysts even argue that men are less suited than women to the knowledge economy, which rewards supposedly female traits such as sensitivity, intuition, and a willingness to collaborate. "Men have tended to do better in the hierarchies, following orders and relying on positional power," says Andy Hines, a futurist at the Washington (D.C.) consulting firm Social Technologies, who previously worked for Kellogg and Dow Chemical.
Problem Industries
Whether you buy that argument or not, it's clear that right now men are in a bad spot. The share of all men aged 20 and over with jobs has fallen since last November, when private-sector employment peaked, going from 72.9% to 72.2% in April. For women the ratio rose, from 58.1% to 58.3%. The adult male unemployment rate has risen twice as much as the female jobless rate since November. Those figures from the BLS' household survey are echoed in its separate survey of employers.
To see why, go sector by sector. Manufacturing is over 70% male and construction is about 88% male. Meanwhile the growing education and health services sector is 77% female. The government sector, which has remained strong, is 57% female. The securities business, which is filled with high-paying jobs, is likely to be the next sector to get whacked—and more than 60% of its workers are men.
Men are having a harder time than women getting back on track after losing a job. "For a man to move from a $20- or $30-an-hour union job to being a Wal-Mart greeter is devastating," says Claudia Goldin, a Harvard University labor historian. Men also shy away from some of the growing fields, such as nursing. Only about 10% of nursing students nationwide are male, notes Harriet R. Feldman, dean of the Pace University School of Nursing. Some retired nurses are actually going back to work because their husbands have lost jobs, says Lois Cooper, vice-president for employee relations and diversity at staffing firm Adecco Group North America in Melville, N.Y.
The weakness of the male economy is squeezing people such as Brian Day, 45, a union carpenter in Ossian, Ind., who made about $35,000 in construction last year but only $1,500 so far in 2008. The family of five is living off his jobless benefits and the $35,000 salary of his wife, a supermarket supervisor. Says Day: "I feel guilty about it." Jeff Bainter, 53, a railroad worker in Muncie, Ind., has enough seniority to keep his job but sees younger men getting the ax. He says there's more security but lower pay in what his wife, Cynthiana, does for a living: medical billing.
Stubborn Pay Gap
The Presidential candidates haven't figured out how to play the disparity between men and women. In BusinessWeek interviews, advisers for all three said they want to help everyone. Austan Goolsbee, chief economic adviser to Senator Barack Obama, said: "Because the unemployed are disproportionately men, they may especially benefit from Obama's program to get us out of recession. But gender has nothing to do with the policy's design." Senator Hillary Clinton's economic policy director, Brian Deese, said: "The goal is not to appeal to men more than women."
One reason for the candidates to tread lightly is that even though men have done worse on jobs lately, they continue to earn more than women on average. Over three-quarters of people who earned over $100,000 last year were men, says Queens College political scientist Andrew Hacker. In fact, although the pay gap between men and women has been gradually narrowing, it actually widened a bit over the past year. Median usual weekly earnings for men grew 4.6% from the first quarter of 2007 through the first quarter of 2008, vs. 3.1% for women.
That might be evidence that the jobs women are landing aren't necessarily good ones. Says Eileen Appelbaum, director of Rutgers University's Center for Women & Work: "We had an expansion of jobs for home health aides, retail clerks, child-care workers. They're low-wage, they're dead-end, and they don't have any benefits."
Another reason politicians aren't making hay of the plight of males is that they are well aware that women are in no mood for it. Working-class and lower-middle-class women in particular, whether or not their men have jobs, are feeling economically stressed, says Bill McInturff, a pollster for Senator John McCain. He adds, "In focus groups they talk about how 'I'm taking care of my parents, his parents, buying groceries, taking kids to the doctor.' These women are tired."
There's no easy remedy for what ails the male economy. Edward J. O'Boyle, senior research associate at the Mayo Research Institute in West Monroe, La., says part of the solution is reviving manufacturing—a gargantuan task. On construction, he favors financial reforms to even out the booms and busts.
Economists are debating whether the overall economy is in a recession. For men, the evidence is clear.
With Maggie Gilmour and Jing Zhou in Chicago and Jane Sasseen in Washington, D.C.
Coy is BusinessWeek's Economics editor.
Copyrighted, Business Week. All rights reserved.
Entry # 15 20600331
My Opinion/Summary:
Biomimicry has been a huge craze among designers and companies for the past ten years. Biomimicry is the concept of using designs and processes from nature to produce better and more efficient products for the end-user. This is a great strategy being implemented by companies across all spans of businesses. For example, the bullet train’s design in use today in Japan have been heavily influenced by biomimicry. The nose cone was influenced by the beak of the kingfisher bird, and the turbines have been designed based on the fins of a whale. These are great improvements because God designed nature and to mimic God’s perfect designs in our inventions would only make sense. Other inventions based on biological things have proven to be very efficient in energy storage and use. Ford currently is working on a product inspired by abalone that would allow for thirty-five percent less fuel usage during normal driving. Benyus the inventor of this movement wrote a book in 1997 that explained that designs based on nature could improve efficiency at all levels.
With the oil crisis in place today and no viable alternative in the near future, preservation of the oil that we have available now may be our best alternative today. By creating newer products that are more environmentally sensitive, we may be able to at least put off the problems we will eventually face for another day and that extra day may be what we need in order to find another source of energy.
--------------------------------------------------------
Article: Using Nature as a Design Guide
Janine Benyus, dean of the burgeoning "biomimicry" design movement, helps companies look to the natural world to help take their business green
by Matt Vella
The nose cone of Japan's 500 Series Shinkansen bullet train is modeled after a kingfisher's beak. Getty Images
Spot the common theme: a bullet train with a distinctly bird-like nose; massive wind turbines whose form was inspired by the shape of whales' fins; ultra-strong, biodegradeable glues developed by analyzing how mussels cling to rocks under water. The creators of each product used nature as their guide. In the past 10 years the practice, known as biomimicry, has yielded a variety of compelling, quirky, and elegant innovations across industries. And as consumers and companies alike find themselves grappling with ever-larger ecological footprints, the design method is taking its place as a core sustainability strategy.
Enter Janine Benyus, the driving force behind the movement. Benyus is the biologist-cum-evangelist who first defined its contours in her 1997 book, Biomimcry: Innovation Inspired by Nature. In it, she detailed how companies could study nonpolluting, energy-efficient manufacturing technologies that have evolved in the natural world over billions of years, delivering in the process a lesson on the importance of living in harmony with nature.
In the ensuing decade, with concerns of sustainability coming to the fore for companies and consumers alike, Benyus has proved well placed to continue preaching her philosophy. Named by Time magazine as an environmental hero of 2007, she's now preparing to take the wraps off the sequel book, Nature's 100 Best Technologies, and an accompanying Web project that could, if successful, radically increase the reach of her thinking and consolidate biomimetic design as a go-to corporate sustainable strategy.
Clients Include GE, HP, and NASA
"Biomimicry is an idea that just acquires people," says Benyus, from her office in Missoula, Mont. In other words, the simple, elegant mechanics developed by nature often make sense in a human context, too. And Benyus, who divides her time between the research nonprofit Biomimicry Institute and the for-profit innovation consultancy, the Biomimicry Guild, is on a mission to show engineers and designers how to translate those ideas into a corporate, commercial context.
Along with strategic consulting and sustainability-focused workshops, the Biomimicry Guild provides a "dial-a-biologist" service that makes one of her team of 10 scientists available to answer designers' technical questions and runs a referral service connecting engineers with field scientists who may be working on relevant research. To date, the Guild counts among its clients companies including General Electric (GE), Hewlett-Packard (HPQ), IDEO, and NASA.
In the past few years the consultancy has broadened its scope to help clients improve internal processes, too. "Often we find ourselves being asked not just how to green a product but how to begin greening a whole company," she says. For instance, Benyus consulted with Interface, a company that famously transformed itself from being the poster child of environmentally harmful textile manufacturing into a $1.3 billion model of sustainability, with biomimetic design one part of its strategy. "More and more, we are helping clients think about running their business like a food web," she adds, referring to self-sustaining biological ecosystems that produce no waste or harmful byproducts.
Following the Flight of Locusts
Biomimicry has also gained traction outside of Benyus' practice, with a wide variety of innovations from companies of all sizes making it to market in the past decade. In 2005, Ford's (F) Volvo Div. developed an anti-collision system based on the way locusts swarm without crashing into one another.
By studying the neurological mechanism that governs how locusts fly in groups, the car company began devising a system that can sense an impending crash and simultaneously trigger an alarm for drivers. Known as the Accident Avoidance System, it's now available on Volvo's high-end vehicles. IBM (IBM) designers analyzed the way abalone shells form by melding microscopic particles of calcium carbonate chalk in a process called "self-assembly." They're now applying the same principles to the development of a series of processors. While still experimental, results reduce energy consumption by some 35%.
With hopes of fostering more bio-inspired innovation, Benyus' next book will be an encyclopedia of unusual forms and processes devised by nature that have yet to be used in industry but which might help solve common problems. "It'll be a compendium of the elegant solutions in nature that answer a lot of questions business people are asking right now," says Benyus, noting that the book will include industry investment analyses to help executives understand the potential economic consequences of implementing designs that specifically follow the natural world's lead.
And in a wily streak that reveals Benyus' inner activist, most of the innovations will be taken from organisms on the so-called Red List, an international inventory of severely endangered species published annually by the International Union for the Conservation of Nature & Natural Resources. That, Benyus hopes, will create an embedded incentive for businesses to safeguard imperiled habitats, protecting nature's design lab not just as a matter of stewardship but as a matter of economic self-interest.
Nike's Goat Tek a No-Go
A companion Web project, meanwhile, will give the compendium a life of its own online. The Biomimicry Design Portal will be a free, open-source, wiki-like database enabling anyone to read and contribute examples of nature's solutions to industrial problems. Entries will be cross-referenced so users searching for adhesive mechanisms, for instance, can find articles on species that create natural glues, their chemical properties, as well as bios of the prominent scientists working in that field. Submissions to the site will be thoroughly peer-reviewed by academics in a fashion similar to the rigorous vetting that scientific research is subjected to before being published. The portal site is intended to be a practical guide for scientists, engineers, and designers as well as students and more casual readers.
There's still plenty more work to be done. Biomimetic design, while a compelling strategy for creating green products, doesn't ensure market success. Nike's (NKE) so-called Goat Tek running shoes were discontinued last year, after just one season on the market. The design of the shoes faithfully mimicked the feet of go-anywhere mountain goats. Human beings, apparently, aren't interested in having goat feet, however nimble it might make them. But while a Nike spokesperson declined to comment on specifics, the company's failure may provide a valuable lesson about the challenges of biomimetic design—that it may be more profitable not to copy nature, but instead to translate ideas in a way that's appealing or even invisible to a human audience.
Still Benyus, perennially optimistic, says the demand for biomimetic design is only likely to grow. "More and more, consumers are asking for the backstories of where their products come from." This, she says, is encouraging companies to look further "up" the production chain to find out exactly where products come from and assess their environmental impact. As green concerns become more common preconditions of purchase, companies will increasingly ask questions of how nature has solved similar design problems. If Benyus has her way, this fall's release of her new book and online portal will begin answering those questions.
View the BusinessWeek.com slide show.
Matt Vella is a writer for BusinessWeek.com in New York.
Biomimicry has been a huge craze among designers and companies for the past ten years. Biomimicry is the concept of using designs and processes from nature to produce better and more efficient products for the end-user. This is a great strategy being implemented by companies across all spans of businesses. For example, the bullet train’s design in use today in Japan have been heavily influenced by biomimicry. The nose cone was influenced by the beak of the kingfisher bird, and the turbines have been designed based on the fins of a whale. These are great improvements because God designed nature and to mimic God’s perfect designs in our inventions would only make sense. Other inventions based on biological things have proven to be very efficient in energy storage and use. Ford currently is working on a product inspired by abalone that would allow for thirty-five percent less fuel usage during normal driving. Benyus the inventor of this movement wrote a book in 1997 that explained that designs based on nature could improve efficiency at all levels.
With the oil crisis in place today and no viable alternative in the near future, preservation of the oil that we have available now may be our best alternative today. By creating newer products that are more environmentally sensitive, we may be able to at least put off the problems we will eventually face for another day and that extra day may be what we need in order to find another source of energy.
--------------------------------------------------------
Article: Using Nature as a Design Guide
Janine Benyus, dean of the burgeoning "biomimicry" design movement, helps companies look to the natural world to help take their business green
by Matt Vella
The nose cone of Japan's 500 Series Shinkansen bullet train is modeled after a kingfisher's beak. Getty Images
Spot the common theme: a bullet train with a distinctly bird-like nose; massive wind turbines whose form was inspired by the shape of whales' fins; ultra-strong, biodegradeable glues developed by analyzing how mussels cling to rocks under water. The creators of each product used nature as their guide. In the past 10 years the practice, known as biomimicry, has yielded a variety of compelling, quirky, and elegant innovations across industries. And as consumers and companies alike find themselves grappling with ever-larger ecological footprints, the design method is taking its place as a core sustainability strategy.
Enter Janine Benyus, the driving force behind the movement. Benyus is the biologist-cum-evangelist who first defined its contours in her 1997 book, Biomimcry: Innovation Inspired by Nature. In it, she detailed how companies could study nonpolluting, energy-efficient manufacturing technologies that have evolved in the natural world over billions of years, delivering in the process a lesson on the importance of living in harmony with nature.
In the ensuing decade, with concerns of sustainability coming to the fore for companies and consumers alike, Benyus has proved well placed to continue preaching her philosophy. Named by Time magazine as an environmental hero of 2007, she's now preparing to take the wraps off the sequel book, Nature's 100 Best Technologies, and an accompanying Web project that could, if successful, radically increase the reach of her thinking and consolidate biomimetic design as a go-to corporate sustainable strategy.
Clients Include GE, HP, and NASA
"Biomimicry is an idea that just acquires people," says Benyus, from her office in Missoula, Mont. In other words, the simple, elegant mechanics developed by nature often make sense in a human context, too. And Benyus, who divides her time between the research nonprofit Biomimicry Institute and the for-profit innovation consultancy, the Biomimicry Guild, is on a mission to show engineers and designers how to translate those ideas into a corporate, commercial context.
Along with strategic consulting and sustainability-focused workshops, the Biomimicry Guild provides a "dial-a-biologist" service that makes one of her team of 10 scientists available to answer designers' technical questions and runs a referral service connecting engineers with field scientists who may be working on relevant research. To date, the Guild counts among its clients companies including General Electric (GE), Hewlett-Packard (HPQ), IDEO, and NASA.
In the past few years the consultancy has broadened its scope to help clients improve internal processes, too. "Often we find ourselves being asked not just how to green a product but how to begin greening a whole company," she says. For instance, Benyus consulted with Interface, a company that famously transformed itself from being the poster child of environmentally harmful textile manufacturing into a $1.3 billion model of sustainability, with biomimetic design one part of its strategy. "More and more, we are helping clients think about running their business like a food web," she adds, referring to self-sustaining biological ecosystems that produce no waste or harmful byproducts.
Following the Flight of Locusts
Biomimicry has also gained traction outside of Benyus' practice, with a wide variety of innovations from companies of all sizes making it to market in the past decade. In 2005, Ford's (F) Volvo Div. developed an anti-collision system based on the way locusts swarm without crashing into one another.
By studying the neurological mechanism that governs how locusts fly in groups, the car company began devising a system that can sense an impending crash and simultaneously trigger an alarm for drivers. Known as the Accident Avoidance System, it's now available on Volvo's high-end vehicles. IBM (IBM) designers analyzed the way abalone shells form by melding microscopic particles of calcium carbonate chalk in a process called "self-assembly." They're now applying the same principles to the development of a series of processors. While still experimental, results reduce energy consumption by some 35%.
With hopes of fostering more bio-inspired innovation, Benyus' next book will be an encyclopedia of unusual forms and processes devised by nature that have yet to be used in industry but which might help solve common problems. "It'll be a compendium of the elegant solutions in nature that answer a lot of questions business people are asking right now," says Benyus, noting that the book will include industry investment analyses to help executives understand the potential economic consequences of implementing designs that specifically follow the natural world's lead.
And in a wily streak that reveals Benyus' inner activist, most of the innovations will be taken from organisms on the so-called Red List, an international inventory of severely endangered species published annually by the International Union for the Conservation of Nature & Natural Resources. That, Benyus hopes, will create an embedded incentive for businesses to safeguard imperiled habitats, protecting nature's design lab not just as a matter of stewardship but as a matter of economic self-interest.
Nike's Goat Tek a No-Go
A companion Web project, meanwhile, will give the compendium a life of its own online. The Biomimicry Design Portal will be a free, open-source, wiki-like database enabling anyone to read and contribute examples of nature's solutions to industrial problems. Entries will be cross-referenced so users searching for adhesive mechanisms, for instance, can find articles on species that create natural glues, their chemical properties, as well as bios of the prominent scientists working in that field. Submissions to the site will be thoroughly peer-reviewed by academics in a fashion similar to the rigorous vetting that scientific research is subjected to before being published. The portal site is intended to be a practical guide for scientists, engineers, and designers as well as students and more casual readers.
There's still plenty more work to be done. Biomimetic design, while a compelling strategy for creating green products, doesn't ensure market success. Nike's (NKE) so-called Goat Tek running shoes were discontinued last year, after just one season on the market. The design of the shoes faithfully mimicked the feet of go-anywhere mountain goats. Human beings, apparently, aren't interested in having goat feet, however nimble it might make them. But while a Nike spokesperson declined to comment on specifics, the company's failure may provide a valuable lesson about the challenges of biomimetic design—that it may be more profitable not to copy nature, but instead to translate ideas in a way that's appealing or even invisible to a human audience.
Still Benyus, perennially optimistic, says the demand for biomimetic design is only likely to grow. "More and more, consumers are asking for the backstories of where their products come from." This, she says, is encouraging companies to look further "up" the production chain to find out exactly where products come from and assess their environmental impact. As green concerns become more common preconditions of purchase, companies will increasingly ask questions of how nature has solved similar design problems. If Benyus has her way, this fall's release of her new book and online portal will begin answering those questions.
View the BusinessWeek.com slide show.
Matt Vella is a writer for BusinessWeek.com in New York.
Entry # 14 20600331
My Opinion/Summary:
Pure Digital Technologies introduced a camcorder in 2007 that took the world by storm. This was possible through the business strategy of product design and marketing techniques used in order to boost sales. The Flip camcorder is a camcorder for the everyday person and user. They stripped the phone from all of the crazy buttons and slots that are available on other camcorders produced by rivals such as Sony. They made the display simple and easy to use. They got rid of the extraordinary amount of wires required to connect it to the PC as well. They saw that camcorders that could be used easily was a need not being met. They noticed that Youtube and other video blog sites were becoming the craze and an easy to use camera was just the answer.
Another reason why the strategy was so good was the pricing of the product. They were first introduced to the United States market for one hundred fifty dollars to one hundred and eighty dollars per unit. This was a huge plus for them because the average camcorder cost about three hundred dollars a unit. The Flip was much more affordable to the average everyday camcorder user. They offer two models that can record either up to thirty minute segments or up to a one hour segment. Another product design feature that was successful was that they were offered in different colors for different tastes.
They were able to be marketed by celebrities such as Oprah and Rosie O’Donnell and were a big hit on Amazon.com. By making such decisions they were able to hit the one million units sold mark in under a year, which is a huge accomplishment. These decisions have allowed this small San Francisco based company to rival against giants such as Panasonic, Sony, and Samsung.
--------------------------------------------------------
Article: Pure Digital Flips the Script
How the Flip—a bare-bones digital camcorder—grew from a simple idea to a contender among giants like Sony
Nicholas Eveleigh
by Reena Jana
It's hard to imagine that Pure Digital Technologies, the company behind the popular Flip Video camcorder, wanted to design a "shy" product. But that's how Jonathan Kaplan, chief executive and founder of the San Francisco-based startup, describes the playful, inviting look of the device.
With nearly 1 million Flips sold since the digital camcorder's May, 2007, debut, and with enthusiastic fans like Oprah and Rosie O'Donnell, Kaplan and his design team seemed to have struck a chord with consumers. In a cutthroat market dominated by global consumer electronics giants such as Sony (SNE), little-known Pure Digital and its 80 employees have changed the game by making a bare-bones, affordable camcorder (starting price: $120 vs. the average $314). To put the number of Flips sold in perspective: About 6 million camcorders were shipped to U.S. retailers in 2007, according to the Arlington (Va.)-based Consumer Electronics Assn. Getting close to the 1 million mark in less than a year is impressive for a new product in this category, says CEA economist Shawn Dubravac. "Before, companies flaunted technical features for nerds and geeks, but consumers are responding to the Flip's convenience and price."
For years, the behemoths have been racing toward designing ever-more-complex video cameras. Then along came the Flip, daring to compromise video quality to offer a cheaper, simpler device. Its images lack the crisp resolution offered by big-name cameras. So should the likes of Sony and Panasonic be worried? Maybe: During the tough 2007 Christmas shopping season, Flip camcorders dominated the top five spots on Amazon.com' (AMZN)s list of most-popular digital video cameras. Kaplan says revenues have jumped 300% in the last year, though privately-held Pure Digital doesn't disclose sales figures. So how did this obscure upstart with no name recognition charm so many fans with a low-tech camcorder with subpar images?
Pure Digital began in 2001 as a maker of throwaway digital cameras for both still pictures and video. The cameras were sold in drugstores and required users to have their images processed on the premises or at a designated digital-photo lab. Buyers started offering unsolicited feedback. "They wanted a more permanent, shoot-and-share video camera that was fun and easy to use," Kaplan says. He paid attention, and created a product for them—without hiring focus groups.
SOAP-BAR SIMPLE
Timed to tap the craze of homegrown videos posted on blogs and YouTube (GOOG), the Flip made it easier for users to become amateur filmmakers. It's a no-frills camera the size of a bar of soap—without cumbersome cables that connect to PCs ("A Sweet and Simple Camcorder", BusinessWeek, 6/04/07).
Kaplan gave his designers a broad goal: strip away all control buttons and features from a typical camcorder and add back only the essentials. They began by eliminating the slot found on many digital cameras for extra memory cards needed to store lots of images. Instead, the Flip offers internal storage from a half hour to an hour, depending on the model. They replaced multiple controls with a simple series of buttons. The hardest part was replacing the unwieldy USB cables and chargers that come with most digital camcorders. First the team tried retracting power cables. But that didn't eliminate cords, which can tangle or get lost. Instead, they chose cheap AA batteries to power the Flip—so there's no need for a clunky plug or AC adapter.
Pure Digital's solution to the messy cables often needed to attach a camcorder to a PC to upload files is a design breakthrough: the flip-out USB key. And it became the Flip's brand symbol. Kaplan's inspiration came not from Silicon Valley but from Detroit—from the key to his Audi.
The car key is concealed in a plastic case until the driver presses a button, causing it to shoot out like a switchblade.
Similarly, the camcorder's USB key is hidden on the side until a button is pushed and it flies out. Users plug it into the USB port of a PC or laptop to quickly transfer their video to a hard drive, and then post clips online. To begin editing or storing video, users don't need CDs to install software on their hard drives when they buy the camera. Its built-in software (compatible with Macs, too) loads instantly each time the device is plugged into any computer.
LIMITED EDITING
Pure Digital pushes new products to market quickly. In September, 2007, four months after its first release, it began selling the smaller Flip Video Ultra in 20,000 stores, including Wal-Mart (WMT), Costco (CSCO), and Best Buy (BBY). Prices are modest: $150 for the 30-minute version of the Ultra, in basic stark white or black, and $180 for the 60-minute one, also available in orange and pink. And to drive consumers to certain stores to buy a particular color, almost like collector's items, some camera colors are exclusive to their retail outlet.
Still, the Flip has flaws. And Kaplan is quick to agree: "O.K., so we don't have the highest-quality components or expensive paints." But those compromises helped Pure Digital keep its own manufacturing and consumer prices down—a helpful lesson for companies looking to save money for themselves and their clientele in a recession.
Critics point to the cameras' simple software, which doesn't offer such features as the ability to add fancy, Hollywood-style titles and scene transitions. To this, Kaplan says, hey—it's a camera and software bought together for less than $200.
"We hear the challenges, but we don't want the software to become more complex," he says. "We want to have software that helps users feel smarter."
Kaplan's position is counterintuitive, just as the Flip's success is. He says Pure Digital is looking for new niches, working on even tinier models—and possibly other devices that feature some of the Flip's user-friendly elements. The small startup that shrank the camcorder is now challenging the big players—in a way that's anything but shy.
Return to Inside Innovation Table of Contents
Jana is the Innovation Dept. editor for BusinessWeek.
Pure Digital Technologies introduced a camcorder in 2007 that took the world by storm. This was possible through the business strategy of product design and marketing techniques used in order to boost sales. The Flip camcorder is a camcorder for the everyday person and user. They stripped the phone from all of the crazy buttons and slots that are available on other camcorders produced by rivals such as Sony. They made the display simple and easy to use. They got rid of the extraordinary amount of wires required to connect it to the PC as well. They saw that camcorders that could be used easily was a need not being met. They noticed that Youtube and other video blog sites were becoming the craze and an easy to use camera was just the answer.
Another reason why the strategy was so good was the pricing of the product. They were first introduced to the United States market for one hundred fifty dollars to one hundred and eighty dollars per unit. This was a huge plus for them because the average camcorder cost about three hundred dollars a unit. The Flip was much more affordable to the average everyday camcorder user. They offer two models that can record either up to thirty minute segments or up to a one hour segment. Another product design feature that was successful was that they were offered in different colors for different tastes.
They were able to be marketed by celebrities such as Oprah and Rosie O’Donnell and were a big hit on Amazon.com. By making such decisions they were able to hit the one million units sold mark in under a year, which is a huge accomplishment. These decisions have allowed this small San Francisco based company to rival against giants such as Panasonic, Sony, and Samsung.
--------------------------------------------------------
Article: Pure Digital Flips the Script
How the Flip—a bare-bones digital camcorder—grew from a simple idea to a contender among giants like Sony
Nicholas Eveleigh
by Reena Jana
It's hard to imagine that Pure Digital Technologies, the company behind the popular Flip Video camcorder, wanted to design a "shy" product. But that's how Jonathan Kaplan, chief executive and founder of the San Francisco-based startup, describes the playful, inviting look of the device.
With nearly 1 million Flips sold since the digital camcorder's May, 2007, debut, and with enthusiastic fans like Oprah and Rosie O'Donnell, Kaplan and his design team seemed to have struck a chord with consumers. In a cutthroat market dominated by global consumer electronics giants such as Sony (SNE), little-known Pure Digital and its 80 employees have changed the game by making a bare-bones, affordable camcorder (starting price: $120 vs. the average $314). To put the number of Flips sold in perspective: About 6 million camcorders were shipped to U.S. retailers in 2007, according to the Arlington (Va.)-based Consumer Electronics Assn. Getting close to the 1 million mark in less than a year is impressive for a new product in this category, says CEA economist Shawn Dubravac. "Before, companies flaunted technical features for nerds and geeks, but consumers are responding to the Flip's convenience and price."
For years, the behemoths have been racing toward designing ever-more-complex video cameras. Then along came the Flip, daring to compromise video quality to offer a cheaper, simpler device. Its images lack the crisp resolution offered by big-name cameras. So should the likes of Sony and Panasonic be worried? Maybe: During the tough 2007 Christmas shopping season, Flip camcorders dominated the top five spots on Amazon.com' (AMZN)s list of most-popular digital video cameras. Kaplan says revenues have jumped 300% in the last year, though privately-held Pure Digital doesn't disclose sales figures. So how did this obscure upstart with no name recognition charm so many fans with a low-tech camcorder with subpar images?
Pure Digital began in 2001 as a maker of throwaway digital cameras for both still pictures and video. The cameras were sold in drugstores and required users to have their images processed on the premises or at a designated digital-photo lab. Buyers started offering unsolicited feedback. "They wanted a more permanent, shoot-and-share video camera that was fun and easy to use," Kaplan says. He paid attention, and created a product for them—without hiring focus groups.
SOAP-BAR SIMPLE
Timed to tap the craze of homegrown videos posted on blogs and YouTube (GOOG), the Flip made it easier for users to become amateur filmmakers. It's a no-frills camera the size of a bar of soap—without cumbersome cables that connect to PCs ("A Sweet and Simple Camcorder", BusinessWeek, 6/04/07).
Kaplan gave his designers a broad goal: strip away all control buttons and features from a typical camcorder and add back only the essentials. They began by eliminating the slot found on many digital cameras for extra memory cards needed to store lots of images. Instead, the Flip offers internal storage from a half hour to an hour, depending on the model. They replaced multiple controls with a simple series of buttons. The hardest part was replacing the unwieldy USB cables and chargers that come with most digital camcorders. First the team tried retracting power cables. But that didn't eliminate cords, which can tangle or get lost. Instead, they chose cheap AA batteries to power the Flip—so there's no need for a clunky plug or AC adapter.
Pure Digital's solution to the messy cables often needed to attach a camcorder to a PC to upload files is a design breakthrough: the flip-out USB key. And it became the Flip's brand symbol. Kaplan's inspiration came not from Silicon Valley but from Detroit—from the key to his Audi.
The car key is concealed in a plastic case until the driver presses a button, causing it to shoot out like a switchblade.
Similarly, the camcorder's USB key is hidden on the side until a button is pushed and it flies out. Users plug it into the USB port of a PC or laptop to quickly transfer their video to a hard drive, and then post clips online. To begin editing or storing video, users don't need CDs to install software on their hard drives when they buy the camera. Its built-in software (compatible with Macs, too) loads instantly each time the device is plugged into any computer.
LIMITED EDITING
Pure Digital pushes new products to market quickly. In September, 2007, four months after its first release, it began selling the smaller Flip Video Ultra in 20,000 stores, including Wal-Mart (WMT), Costco (CSCO), and Best Buy (BBY). Prices are modest: $150 for the 30-minute version of the Ultra, in basic stark white or black, and $180 for the 60-minute one, also available in orange and pink. And to drive consumers to certain stores to buy a particular color, almost like collector's items, some camera colors are exclusive to their retail outlet.
Still, the Flip has flaws. And Kaplan is quick to agree: "O.K., so we don't have the highest-quality components or expensive paints." But those compromises helped Pure Digital keep its own manufacturing and consumer prices down—a helpful lesson for companies looking to save money for themselves and their clientele in a recession.
Critics point to the cameras' simple software, which doesn't offer such features as the ability to add fancy, Hollywood-style titles and scene transitions. To this, Kaplan says, hey—it's a camera and software bought together for less than $200.
"We hear the challenges, but we don't want the software to become more complex," he says. "We want to have software that helps users feel smarter."
Kaplan's position is counterintuitive, just as the Flip's success is. He says Pure Digital is looking for new niches, working on even tinier models—and possibly other devices that feature some of the Flip's user-friendly elements. The small startup that shrank the camcorder is now challenging the big players—in a way that's anything but shy.
Return to Inside Innovation Table of Contents
Jana is the Innovation Dept. editor for BusinessWeek.
Entry # 13 20600331
My Opinion/Summary:
Institutional innovations seem to be the new wave in innovation technology. It is a strategy that allows for the best thinkers and minds to collaborate their ideas in making the best possible product for the end-user, us. This is a great business strategy for them and for us. Companies can now share the costs of research and development in order to produce newer and better products for us to use. This would greatly decrease the cost to us because the research and development costs would be shared among a couple of companies and not just one. This is also a great idea because the best minds in each company can now work together. Better products could be on the horizon because better minds are working to find them.
One group, the Myelin Repair Foundation, has been able to collaborate their innovator and inventors to create a new model in which myelin repairs itself. This was possible through the collaboration of four research teams. With this new model, there are new hopes in which a drug could be formulated to be able to repair myelin, a problem that is the cause of many diseases, including Huntington’s disease. Royalties and intellectual rights for this new product and idea should not be a problem. Myelin Repair Foundation has signed agreements with other academic institutions and have agreed to make available patent opportunities for them as well. Overall this is a great new innovation in itself because it allows for more and better products to be introduced to the public at a lower cost in shorter amounts of time.
--------------------------------------------------------
Article: Institutional Innovations
A Silicon Valley nonprofit fostered the development of a radical open-source platform for top-level health research
by John Hagel and John Seely Brown
As a management topic, innovation couldn't be hotter—even as the economy is cooling down. But how much innovation is there on innovation itself? Nearly everybody goes beyond products and services to think about innovations to the core processes of the firm. Some even subscribe to the notion of management innovation. Yet all of today's discussions about innovation are bounded by a common flaw: They stay cloistered within the four walls of the enterprise.
Innovation is needed within companies, to be sure. But today's most powerful and exciting forms of innovation are taking place across company boundaries. Think of them as institutional innovations—the changes companies make to redefine roles and relationships across independent entities to deliver more value to the marketplace and to society. Institutional innovation transcends what an individual inventor or even an innovative company can do. Innovation is a decidedly social process encompassing diverse individuals, corporations, communities, networks, and regions.
Rather than taking the four walls of the enterprise as a given, today's most promising institutional innovations seek better ways of connecting talent wherever it resides and building relationships that foster and focus learning.
An Effective Research Road Map
Consider the powerful example of the Silicon Valley nonprofit Myelin Repair Foundation (MRF), which provides an early glimpse of next-generation institutional innovation (BusinessWeek.com, 11/15/07) as it emerges on the edge of medical research and drug discovery. As its name suggests, MRF has a very specific target—to mobilize and focus research on a particular biological process, myelin repair.
Myelin is the substance that coats our nerves to facilitate the passage of electrical signals. In multiple sclerosis, that myelin coating begins to degrade, resulting in a host of symptoms, including fatigue, blindness, and loss of balance, ultimately leading to paralysis and death. The MRF was founded by Scott Johnson, a civil engineer and MBA by training, who himself suffers from the disease.
What's new and exciting about MRF's approach to myelin-repair research is that it creates a distributed network of researchers within diverse academic disciplines such as neurobiology, immunology, and neurology from independent academic institutions in the U.S., including Stanford University and Case Western Reserve University. These researchers collaborate in defining coordinated research initiatives across institutional boundaries—sharing results with each other in real time.
By jointly developing a research road map, participants construct a shared model of possible explanations of the myelin-repair process and pursue parallel, rather than sequential, problem-solving. This approach, combined with rapid iterations where participants review each other's results and refine their approaches based on this shared learning, dramatically compresses the time required for research to generate promising discoveries.
Collaborative Effort and Intellectual Property
To date, MRF has recruited four top researchers, each of whom runs a lab of 10 to 18 research staff who all contribute full-time to this growing, distributed network. These researchers maintain their existing institutional affiliations but join together in the collaboration infrastructure created by MRF, which includes joint research reviews three times a year, monthly conference calls, a shared audio/video/data platform to virtually link all participants, daily interactions, and the archiving of critical intellectual property for patent protection. MRF supplements the capabilities of this core team by contracting other academic researchers and commercial entities to expedite completion of the research plan and move discoveries into commercial drug development and clinical trials.
MRF signed intellectual-property agreements with each of the academic institutions involved, with which it will share royalties generated from discoveries it has helped to fund.
Lawyers engage with the researchers at an early stage of the research process to identify patent opportunities and document contributions to the discovery process so the appropriate researchers are credited for their contributions. And MRF also helps to identify appropriate commercialization partners in the biopharmaceutical industry for license agreements on patents to speed the transition from lab to clinic. With its 50% share of anticipated royalties, MRF will be able to fund even more research in the years ahead—and ultimately become self-funding.
Accelerating Results
But the real incentive for researchers entering this collaboration was not the MRF funding or the potential royalties down the road; it was the opportunity to make faster progress in their own areas of interest and to deepen their own understanding by working with other leading-edge researchers. The researchers are coming together in this process network because they see an opportunity to make rapid progress in solving large, complex, real-world medical problems.
As Ben Barres, professor of neurology at Stanford and one of the four senior researchers collaborating in the network, notes: "We are bringing together academic scientists that operate in an environment where traditionally data cannot be shared until after experiments are complete and published. Within the consortium model, every time the team gets together, sparks fly. There's no question that better teamwork in science can significantly accelerate results."
Scott Cook, the founder of Intuit and an early contributor to the MRF, observes: "The Myelin Repair Foundation is pioneering a new way to organize medical research that speeds breakthrough drug discovery. It uses a unique approach to shared incentives to produce intense collaboration and rapid idea-sharing among the leading neuroscience centers."
Time Frame and Takeaways
In 2004, the MRF undertook a five-year, $25 million research program with the goal of licensing its first myelin-repair drug target by 2009. Conventional research approaches would take 15 to 30 years to identify and validate a single target suitable for drug development. The MRF is currently pursuing leads for 18 targets and is confident it is on track to license the first one by next year. Before coming into the MRF network, the primary researchers had accumulated 125 years of research experience and, in that time, filed for two patents. In the few short years since the MRF network came together, they have already filed for nine patents with eight more in the pipeline.
So, what can executives take away from the MRF story?
1. Institutional innovation amplifies other forms of innovation. The researchers in the MRF network are generating significant discoveries, leading to much greater patent activity. The MRF itself has innovated on the discovery process. But underlying all of this innovation is the institutional innovation driven by Scott Johnson and his team—finding ways to more effectively coordinate research activities across distributed teams in very different disciplines and across major institutional boundaries. As the race for talent intensifies, all businesses will benefit from innovating innovation at this fundamental level.
2. Customer co-creation will become even more profound and sustained. The MRF took shape under the leadership of an MS patient, not an academic researcher or a pharmaceutical company. Experiencing MS firsthand, Scott Johnson had little patience for the slow, sequential pace of traditional medical research and a strong motivation to pioneer innovative approaches to generating promising treatments. Most of the stories of customer co-creation to date spotlight relatively narrow and episodic input provided by customers into specific features or products. Johnson's involvement in the medical research process is far more engaged: He actively participates in the sessions that define the research agenda.
Companies need to seek out customers with the kind of insight and passion that Johnson brings—and find ways to engage with them in much more fundamental ways than conventional market research or customer forums permit. Customers represent an important edge that will drive business innovation in the future. Companies should also remember they are customers themselves and find ways to promote institutional innovation among suppliers and other business partners.
3. Boundaries between domains of knowledge represent significant edges for innovation. Knowledge silos help to deepen knowledge, but they can become significant barriers to insight when experts find it difficult to connect across them. The MRF has paid a lot of attention to building shared understanding and respect across very diverse domains of research. By bringing together experts from such different areas, it's possible to generate insights that simply would not have arisen from individual domains.
4. Innovation is not just about idea generation. Too often, discussions of innovation tend to focus on ways to generate more creative ideas. In our experience, the core innovation challenge in the business world is rarely about generating more ideas. Sift through any business organization and there is an abundance of ideas. The real challenge is to mobilize a critical mass of resources behind promising ideas and to create the mechanisms to more rapidly test and refine ideas as they move from concept to delivery. This is one of the core insights of MRF's institutional innovation—it focuses on accelerating the idea-testing process and creating the necessary incentives to rapidly scale the most promising ideas into commercially successful products.
5. Distributed innovation does not necessarily mean loss of intellectual-property protection. A key institutional innovation of the MRF was to develop a way for participants to file for patent protection more rapidly while still sharing their discoveries traditionally via publication in peer-reviewed journals. Without adequate patent protection, the intellectual property generated from MRF's research would have little appeal to biopharmaceutical companies that will have to invest significant amounts of their own money to commercialize products. At one level, the MRF has created an open-source platform engaging peers from diverse institutions while finding a robust way to protect intellectual property.
John Hagel and John Seely Brown are co-chairman and independent co-chairman, respectively, of Deloitte LLP's Center for Edge Innovation. John Hagel writes a blog at Edge Perspectives. Their monthly column, Innovation on the Edge, explores what executives can learn from innovation emerging on various forms of edges, including the edges of institutions, markets, geographies and generations. Sign up here for an RSS feed.
Institutional innovations seem to be the new wave in innovation technology. It is a strategy that allows for the best thinkers and minds to collaborate their ideas in making the best possible product for the end-user, us. This is a great business strategy for them and for us. Companies can now share the costs of research and development in order to produce newer and better products for us to use. This would greatly decrease the cost to us because the research and development costs would be shared among a couple of companies and not just one. This is also a great idea because the best minds in each company can now work together. Better products could be on the horizon because better minds are working to find them.
One group, the Myelin Repair Foundation, has been able to collaborate their innovator and inventors to create a new model in which myelin repairs itself. This was possible through the collaboration of four research teams. With this new model, there are new hopes in which a drug could be formulated to be able to repair myelin, a problem that is the cause of many diseases, including Huntington’s disease. Royalties and intellectual rights for this new product and idea should not be a problem. Myelin Repair Foundation has signed agreements with other academic institutions and have agreed to make available patent opportunities for them as well. Overall this is a great new innovation in itself because it allows for more and better products to be introduced to the public at a lower cost in shorter amounts of time.
--------------------------------------------------------
Article: Institutional Innovations
A Silicon Valley nonprofit fostered the development of a radical open-source platform for top-level health research
by John Hagel and John Seely Brown
As a management topic, innovation couldn't be hotter—even as the economy is cooling down. But how much innovation is there on innovation itself? Nearly everybody goes beyond products and services to think about innovations to the core processes of the firm. Some even subscribe to the notion of management innovation. Yet all of today's discussions about innovation are bounded by a common flaw: They stay cloistered within the four walls of the enterprise.
Innovation is needed within companies, to be sure. But today's most powerful and exciting forms of innovation are taking place across company boundaries. Think of them as institutional innovations—the changes companies make to redefine roles and relationships across independent entities to deliver more value to the marketplace and to society. Institutional innovation transcends what an individual inventor or even an innovative company can do. Innovation is a decidedly social process encompassing diverse individuals, corporations, communities, networks, and regions.
Rather than taking the four walls of the enterprise as a given, today's most promising institutional innovations seek better ways of connecting talent wherever it resides and building relationships that foster and focus learning.
An Effective Research Road Map
Consider the powerful example of the Silicon Valley nonprofit Myelin Repair Foundation (MRF), which provides an early glimpse of next-generation institutional innovation (BusinessWeek.com, 11/15/07) as it emerges on the edge of medical research and drug discovery. As its name suggests, MRF has a very specific target—to mobilize and focus research on a particular biological process, myelin repair.
Myelin is the substance that coats our nerves to facilitate the passage of electrical signals. In multiple sclerosis, that myelin coating begins to degrade, resulting in a host of symptoms, including fatigue, blindness, and loss of balance, ultimately leading to paralysis and death. The MRF was founded by Scott Johnson, a civil engineer and MBA by training, who himself suffers from the disease.
What's new and exciting about MRF's approach to myelin-repair research is that it creates a distributed network of researchers within diverse academic disciplines such as neurobiology, immunology, and neurology from independent academic institutions in the U.S., including Stanford University and Case Western Reserve University. These researchers collaborate in defining coordinated research initiatives across institutional boundaries—sharing results with each other in real time.
By jointly developing a research road map, participants construct a shared model of possible explanations of the myelin-repair process and pursue parallel, rather than sequential, problem-solving. This approach, combined with rapid iterations where participants review each other's results and refine their approaches based on this shared learning, dramatically compresses the time required for research to generate promising discoveries.
Collaborative Effort and Intellectual Property
To date, MRF has recruited four top researchers, each of whom runs a lab of 10 to 18 research staff who all contribute full-time to this growing, distributed network. These researchers maintain their existing institutional affiliations but join together in the collaboration infrastructure created by MRF, which includes joint research reviews three times a year, monthly conference calls, a shared audio/video/data platform to virtually link all participants, daily interactions, and the archiving of critical intellectual property for patent protection. MRF supplements the capabilities of this core team by contracting other academic researchers and commercial entities to expedite completion of the research plan and move discoveries into commercial drug development and clinical trials.
MRF signed intellectual-property agreements with each of the academic institutions involved, with which it will share royalties generated from discoveries it has helped to fund.
Lawyers engage with the researchers at an early stage of the research process to identify patent opportunities and document contributions to the discovery process so the appropriate researchers are credited for their contributions. And MRF also helps to identify appropriate commercialization partners in the biopharmaceutical industry for license agreements on patents to speed the transition from lab to clinic. With its 50% share of anticipated royalties, MRF will be able to fund even more research in the years ahead—and ultimately become self-funding.
Accelerating Results
But the real incentive for researchers entering this collaboration was not the MRF funding or the potential royalties down the road; it was the opportunity to make faster progress in their own areas of interest and to deepen their own understanding by working with other leading-edge researchers. The researchers are coming together in this process network because they see an opportunity to make rapid progress in solving large, complex, real-world medical problems.
As Ben Barres, professor of neurology at Stanford and one of the four senior researchers collaborating in the network, notes: "We are bringing together academic scientists that operate in an environment where traditionally data cannot be shared until after experiments are complete and published. Within the consortium model, every time the team gets together, sparks fly. There's no question that better teamwork in science can significantly accelerate results."
Scott Cook, the founder of Intuit and an early contributor to the MRF, observes: "The Myelin Repair Foundation is pioneering a new way to organize medical research that speeds breakthrough drug discovery. It uses a unique approach to shared incentives to produce intense collaboration and rapid idea-sharing among the leading neuroscience centers."
Time Frame and Takeaways
In 2004, the MRF undertook a five-year, $25 million research program with the goal of licensing its first myelin-repair drug target by 2009. Conventional research approaches would take 15 to 30 years to identify and validate a single target suitable for drug development. The MRF is currently pursuing leads for 18 targets and is confident it is on track to license the first one by next year. Before coming into the MRF network, the primary researchers had accumulated 125 years of research experience and, in that time, filed for two patents. In the few short years since the MRF network came together, they have already filed for nine patents with eight more in the pipeline.
So, what can executives take away from the MRF story?
1. Institutional innovation amplifies other forms of innovation. The researchers in the MRF network are generating significant discoveries, leading to much greater patent activity. The MRF itself has innovated on the discovery process. But underlying all of this innovation is the institutional innovation driven by Scott Johnson and his team—finding ways to more effectively coordinate research activities across distributed teams in very different disciplines and across major institutional boundaries. As the race for talent intensifies, all businesses will benefit from innovating innovation at this fundamental level.
2. Customer co-creation will become even more profound and sustained. The MRF took shape under the leadership of an MS patient, not an academic researcher or a pharmaceutical company. Experiencing MS firsthand, Scott Johnson had little patience for the slow, sequential pace of traditional medical research and a strong motivation to pioneer innovative approaches to generating promising treatments. Most of the stories of customer co-creation to date spotlight relatively narrow and episodic input provided by customers into specific features or products. Johnson's involvement in the medical research process is far more engaged: He actively participates in the sessions that define the research agenda.
Companies need to seek out customers with the kind of insight and passion that Johnson brings—and find ways to engage with them in much more fundamental ways than conventional market research or customer forums permit. Customers represent an important edge that will drive business innovation in the future. Companies should also remember they are customers themselves and find ways to promote institutional innovation among suppliers and other business partners.
3. Boundaries between domains of knowledge represent significant edges for innovation. Knowledge silos help to deepen knowledge, but they can become significant barriers to insight when experts find it difficult to connect across them. The MRF has paid a lot of attention to building shared understanding and respect across very diverse domains of research. By bringing together experts from such different areas, it's possible to generate insights that simply would not have arisen from individual domains.
4. Innovation is not just about idea generation. Too often, discussions of innovation tend to focus on ways to generate more creative ideas. In our experience, the core innovation challenge in the business world is rarely about generating more ideas. Sift through any business organization and there is an abundance of ideas. The real challenge is to mobilize a critical mass of resources behind promising ideas and to create the mechanisms to more rapidly test and refine ideas as they move from concept to delivery. This is one of the core insights of MRF's institutional innovation—it focuses on accelerating the idea-testing process and creating the necessary incentives to rapidly scale the most promising ideas into commercially successful products.
5. Distributed innovation does not necessarily mean loss of intellectual-property protection. A key institutional innovation of the MRF was to develop a way for participants to file for patent protection more rapidly while still sharing their discoveries traditionally via publication in peer-reviewed journals. Without adequate patent protection, the intellectual property generated from MRF's research would have little appeal to biopharmaceutical companies that will have to invest significant amounts of their own money to commercialize products. At one level, the MRF has created an open-source platform engaging peers from diverse institutions while finding a robust way to protect intellectual property.
John Hagel and John Seely Brown are co-chairman and independent co-chairman, respectively, of Deloitte LLP's Center for Edge Innovation. John Hagel writes a blog at Edge Perspectives. Their monthly column, Innovation on the Edge, explores what executives can learn from innovation emerging on various forms of edges, including the edges of institutions, markets, geographies and generations. Sign up here for an RSS feed.
Entry # 12 20600331
My Opinion/Summary:
Facebook has taken over the markets where MySpace and other different blog sites have dominated in the past few years. Facebook originally started as a blog site where college students could find other college students and friends in college. It was a major tool for those users to be able to network. In the past couple of years, Facebook opened itself up to all users, not just the college-user. Facebook has recently run into a problem however. With more and more applications being put up onto Facebook, the actual page is becoming cluttered and harder to use. This is a problem because its clean appearance was what won users over from MySpace and other sites in the beginning. The managers at Facebook decided to give the website a facelift. This is a great idea because this was the same problem that MySpace ran into and could not solve. Eventually MySpace has fallen from the limelight in the United States. The managers have mentioned taking the different applications available on Facebook and putting them all on separate pages. This would in turn free up the home page that is beginning to already look much cluttered.
Another decision that Facebook has made is to not listen as much to the users’ input into how the applications should look on the website. With now much more users on Facebook it is not viable for them to be able to evaluate all of the suggestions and then make a decision. Therefore a decision was made to trust the web designers more. This is a good idea because the process of new applications coming onto the website would be more feasible than if all of the suggestions were accounted for.
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Facebook's Big Facelift
The social networking site's coming redesign will be marked by a cleaner, more organized look to appeal to its vastly bigger, more diverse user base
by Matt Vella
Facebook's designers want to cut the clutter. The Palo Alto (Calif.) social networking site is readying an extensive overhaul of its core profile pages in an attempt to bring back the sleek aesthetic that helped fuel its early popularity. Executives say the redesign should hit the Web browsers of Facebook's 70 million worldwide users in the next few weeks.
The moves come in reaction to Facebook's becoming "more cluttered and harder for users to parse," according to Katie Geminder, the site's director of user experience and design, who oversees the design team working on the project. As such, the redesign represents a major simplification. Elements currently displayed on one crowded page—personal information, photos, the continually updating news feed, and the "wall", where users can post comments, for example—will probably be divided between separate pages and accessible through distinct tabs. The new design also collects and sidelines independently developed applications, such as games of Scrabble or the chance for users to rank the "hotness" of their friends.
"People are starting to feel that Facebook is quickly becoming like MySpace," says Adam Ostrow, editor-in-chief of Mashable.com, an online social networking news site. He's referring to the fact that News Corp.'s (NWS) MySpace has allowed its more than 100 million users to create wildly different looking pages, replete with neon backgrounds and blinking text. In contrast, Facebook's design had been praised for being clean and tidy. But now, with the proliferation of viral applications that are simply "spam in disguise," according to Ostrow, things have gotten messy. So in February, Geminder and her team set to work. The same team, which includes people from engineering, graphic, and user interface design, will also analyze usage data and process user comments once the changes launch.
New Ways to Arrange the Info
The makeover itself is more than skin deep, though many critical elements of the site's identity remain untouched, including its typography and color palette. "They're not questioning the visual identity of the brand," says Christopher Fahey, a partner at New York's Behavior Design. Instead, designers are focusing on the site's wider architecture and on ways of displaying and ordering the information. That, says Fahey, could give users more options without radically altering the look and feel of the site. As Fahey points out, this belief in a company's fundamental design language has worked well for companies such as Apple (AAPL) and Amazon (AMZN) and signals a sense of C-suite confidence in the product at large.
That confidence will come in handy as Facebook deals with maturing from a scrappy campus startup into a corporation valued at $15 billion, thanks to the $240 million investment made by Microsoft (MSFT) last October. The new design, template, and architecture have to keep pace with the site's growth—U.S. membership has jumped 71% since last March, according to comScore (SCOR)—and with the increased diversity and desires of its user base. Of course, off-loading some features onto new pages could also increase page views, a critical metric for advertisers looking to spend their marketing budgets online.
Facebook's designers have been open about changes, publicizing their proposals through the company's developer blog and wiki. Designers also created a Facebook Profiles Preview group within the site, which has about 55,000 members who are monitoring the redesign and commenting on new features as they are developed.
It's an obvious response to a series of public missteps, such as the introduction of the news feed feature (BusinessWeek.com, 9/8/06) added in September, 2006, which drew immediate animosity from users. In March, co-founder Mark Zuckerberg apologized for missteps associated with last fall's launch of the Beacon advertising platform (BusinessWeek.com, 11/28/07). "In this round, we are focused on listening to users, gathering feedback, and giving users more control," says Geminder.
Designers to the Fore
Still, the site's designers are facing a milestone. A quintessentially Web 2.0 product, Facebook was an early cohort of sites whose growth has been characterized by developers and designers' willingness to heed users' desires when creating new features. Now the site may have reached a point where designers need to listen to themselves as much as the users. "Sites like this have evolved depending on how people want to use them, but Facebook is [so big it] may need to slow down and formalize its process," says David Armano, vice-president for experience design at Critical Mass, which has created sites for the likes of NASA and Mercedes-Benz (DAI).
"In many ways, the hallmark of the Web 2.0 movement is users' belief that 'this is our Web,'" adds Bruce Temkin, vice-president and principal analyst of customer experience at Forrester Research in Cambridge, Mass., who says listening to feedback could be as important as asking for input ahead of launch. For her part, Geminder says Facebook's designers are engaged in the process, preparing smart changes rather than simply foisting them on an audience without allowing them to interact or push back. "Sometimes," adds Fahey, "a designer's job is to interpret carefully what may lie behind even cantankerous feedback." Users, in other words, may not appreciate all the ramifications of their requests, and designers must sort through the responses and apply what's appropriate.
And, as Temkin points out, it's hard for the designers of a social network to formalize too much of the user experience. While designers of, say, an online banking application can make changes purely in the name of usability, Facebook's designers must strike a balance between the site as a form of entertainment, on the one hand, and a useful tool, on the other. "If you take the fun out of Facebook, you've got a big problem," says Temkin.
In the end, the moves today could provide a blueprint for future high-profile redesigns at the company. In fact, if the site's designers pull it off, restoring simplicity while maintaining popularity, Temkin says the move could even become a test case for "what happens at the next level of maturity for a lot of Web 2.0 companies, writ large."
Matt Vella is a writer for BusinessWeek.com in New York.
Facebook has taken over the markets where MySpace and other different blog sites have dominated in the past few years. Facebook originally started as a blog site where college students could find other college students and friends in college. It was a major tool for those users to be able to network. In the past couple of years, Facebook opened itself up to all users, not just the college-user. Facebook has recently run into a problem however. With more and more applications being put up onto Facebook, the actual page is becoming cluttered and harder to use. This is a problem because its clean appearance was what won users over from MySpace and other sites in the beginning. The managers at Facebook decided to give the website a facelift. This is a great idea because this was the same problem that MySpace ran into and could not solve. Eventually MySpace has fallen from the limelight in the United States. The managers have mentioned taking the different applications available on Facebook and putting them all on separate pages. This would in turn free up the home page that is beginning to already look much cluttered.
Another decision that Facebook has made is to not listen as much to the users’ input into how the applications should look on the website. With now much more users on Facebook it is not viable for them to be able to evaluate all of the suggestions and then make a decision. Therefore a decision was made to trust the web designers more. This is a good idea because the process of new applications coming onto the website would be more feasible than if all of the suggestions were accounted for.
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Facebook's Big Facelift
The social networking site's coming redesign will be marked by a cleaner, more organized look to appeal to its vastly bigger, more diverse user base
by Matt Vella
Facebook's designers want to cut the clutter. The Palo Alto (Calif.) social networking site is readying an extensive overhaul of its core profile pages in an attempt to bring back the sleek aesthetic that helped fuel its early popularity. Executives say the redesign should hit the Web browsers of Facebook's 70 million worldwide users in the next few weeks.
The moves come in reaction to Facebook's becoming "more cluttered and harder for users to parse," according to Katie Geminder, the site's director of user experience and design, who oversees the design team working on the project. As such, the redesign represents a major simplification. Elements currently displayed on one crowded page—personal information, photos, the continually updating news feed, and the "wall", where users can post comments, for example—will probably be divided between separate pages and accessible through distinct tabs. The new design also collects and sidelines independently developed applications, such as games of Scrabble or the chance for users to rank the "hotness" of their friends.
"People are starting to feel that Facebook is quickly becoming like MySpace," says Adam Ostrow, editor-in-chief of Mashable.com, an online social networking news site. He's referring to the fact that News Corp.'s (NWS) MySpace has allowed its more than 100 million users to create wildly different looking pages, replete with neon backgrounds and blinking text. In contrast, Facebook's design had been praised for being clean and tidy. But now, with the proliferation of viral applications that are simply "spam in disguise," according to Ostrow, things have gotten messy. So in February, Geminder and her team set to work. The same team, which includes people from engineering, graphic, and user interface design, will also analyze usage data and process user comments once the changes launch.
New Ways to Arrange the Info
The makeover itself is more than skin deep, though many critical elements of the site's identity remain untouched, including its typography and color palette. "They're not questioning the visual identity of the brand," says Christopher Fahey, a partner at New York's Behavior Design. Instead, designers are focusing on the site's wider architecture and on ways of displaying and ordering the information. That, says Fahey, could give users more options without radically altering the look and feel of the site. As Fahey points out, this belief in a company's fundamental design language has worked well for companies such as Apple (AAPL) and Amazon (AMZN) and signals a sense of C-suite confidence in the product at large.
That confidence will come in handy as Facebook deals with maturing from a scrappy campus startup into a corporation valued at $15 billion, thanks to the $240 million investment made by Microsoft (MSFT) last October. The new design, template, and architecture have to keep pace with the site's growth—U.S. membership has jumped 71% since last March, according to comScore (SCOR)—and with the increased diversity and desires of its user base. Of course, off-loading some features onto new pages could also increase page views, a critical metric for advertisers looking to spend their marketing budgets online.
Facebook's designers have been open about changes, publicizing their proposals through the company's developer blog and wiki. Designers also created a Facebook Profiles Preview group within the site, which has about 55,000 members who are monitoring the redesign and commenting on new features as they are developed.
It's an obvious response to a series of public missteps, such as the introduction of the news feed feature (BusinessWeek.com, 9/8/06) added in September, 2006, which drew immediate animosity from users. In March, co-founder Mark Zuckerberg apologized for missteps associated with last fall's launch of the Beacon advertising platform (BusinessWeek.com, 11/28/07). "In this round, we are focused on listening to users, gathering feedback, and giving users more control," says Geminder.
Designers to the Fore
Still, the site's designers are facing a milestone. A quintessentially Web 2.0 product, Facebook was an early cohort of sites whose growth has been characterized by developers and designers' willingness to heed users' desires when creating new features. Now the site may have reached a point where designers need to listen to themselves as much as the users. "Sites like this have evolved depending on how people want to use them, but Facebook is [so big it] may need to slow down and formalize its process," says David Armano, vice-president for experience design at Critical Mass, which has created sites for the likes of NASA and Mercedes-Benz (DAI).
"In many ways, the hallmark of the Web 2.0 movement is users' belief that 'this is our Web,'" adds Bruce Temkin, vice-president and principal analyst of customer experience at Forrester Research in Cambridge, Mass., who says listening to feedback could be as important as asking for input ahead of launch. For her part, Geminder says Facebook's designers are engaged in the process, preparing smart changes rather than simply foisting them on an audience without allowing them to interact or push back. "Sometimes," adds Fahey, "a designer's job is to interpret carefully what may lie behind even cantankerous feedback." Users, in other words, may not appreciate all the ramifications of their requests, and designers must sort through the responses and apply what's appropriate.
And, as Temkin points out, it's hard for the designers of a social network to formalize too much of the user experience. While designers of, say, an online banking application can make changes purely in the name of usability, Facebook's designers must strike a balance between the site as a form of entertainment, on the one hand, and a useful tool, on the other. "If you take the fun out of Facebook, you've got a big problem," says Temkin.
In the end, the moves today could provide a blueprint for future high-profile redesigns at the company. In fact, if the site's designers pull it off, restoring simplicity while maintaining popularity, Temkin says the move could even become a test case for "what happens at the next level of maturity for a lot of Web 2.0 companies, writ large."
Matt Vella is a writer for BusinessWeek.com in New York.
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