by Luke Ho-Hyung Lee
Jobs Created In the Modern Information Age
The development of the Modern Information Age made possible by the Digital Revolution and the Internet has unquestionably brought major changes to the market and to society as a whole. The increases in efficiency and application capabilities resulting from the introduction of personal computers in the early 1980s have made possible the development and spread of a multitude of digital devices and realized the digital revolution. It has created many new businesses and jobs in the manufacturing and technology sectors of the market. It has also made possible the development and expansion of IT and computer networking technology.
Through the use of IT and networking technology, many new businesses and jobs could also be created by developing many network-based software applications in the information technology sector at that time. Moreover, with the further development of IT and networking technology and the introduction of the World Wide Web, we could finally have developed and popularized the Internet as a meta-platform between information sources and recipients, and realized the Internet Revolution. It has made huge increases in effectiveness in information and created numerous new businesses and jobs by developing numerous web-based software applications. Furthermore, through the development of many kinds of sub-platform and cloud computing solutions, many more new businesses and jobs could have been created by developing numerous sub-platform & cloud computing-based software applications.
This development of modern information accessibility has led to immense economic growth in the IT and Internet sectors around the world, beginning with the popularization of the Internet in 1996. However, the so-called dot-com economy between 1997 and 2001 failed to make profits or enlarge economic gains and, thereafter, engendered a bubble economy. Moreover, this improved communication capability has not been utilized to its fullest potential in other sectors of the market, mostly the real market, and for some reasons, employment conditions in the real market have been steadily and seriously worsened.
Increased Individual Job Creation Capability in the Modern Information Age
According to the U.S. Patent Statistics Chart, the total number of patent applications in 1963 was 90,982, and that in 1981 was 113,966. It had increased only 25.3% in 19 years (from 1963 to 1981).
On the other hand, the total number of patent applications in 1982 when personal computers were introduced was 117,987, and in 1995 was 228,238, a significant increase of 93.4%. Furthermore, in 1996 when the Internet started being popularized, that number was 211,013, and in 2010 was 520,277. It had more sharply increased by 146.6% over 15 years. If we assume that the Modern Information Age started in 1982 with the introduction of personal computers, the total number of patent applications has already increased more than 340% over the Modern Information Age.
Patent applications could be regarded as new ideas, new recipes or new businesses, and new jobs as well. Therefore, it could be said that no matter how good or poor the general employment situation has been, the individual job creation capability itself has increased significantly in the Modern Information Age. There must be something seriously wrong between the worsening of employment situation and the increased individual job creation capability.
What Has Happened in the Modern Information Market?
Paul Romer, NYU Professor of Economics, said in his article “Economic Growth”, “Economic growth occurs whenever people take resources and rearrange them in ways that are more valuable. A useful metaphor for production in an economy comes from the kitchen. To create valuable final products, we mix inexpensive ingredients together according to a recipe. The cooking one can do is limited by the supply of ingredients, and most cooking in the economy produces undesirable side effects. If economic growth could be achieved only by doing more and more of the same kind of cooking, we would eventually run out of raw materials and suffer from unacceptable levels of pollution and nuisance. Human history teaches us, however, that economic growth springs from better recipes, not just from more cooking. New recipes generally produce fewer unpleasant side effects and generate more economic value per unit of raw material.”
Yes, I totally agree with him in general, especially in production, but I still think something else must be wrong in our market or economy. Because even if the individual recipe (job) creation capability has increased significantly in the Modern Information Age, new recipes (new ideas or new businesses) still have not been implemented enough in the market to realize the economic growth. What is really wrong in our market or economy? We should figure out first what that is.
This time I would suggest you examine carefully the existing market or supply chain process in our market or economy. Let’s see the following diagram:
As you may already have recognized, there are many different kinds of supply chain methods in the existing market or supply chain process. This includes both conventional and electronic (i.e., information-based) methods. Isn’t there any common characteristic in those many different supply chain methods? Directly speaking, almost all of them are being used to construct a functional supply chain network for a supplier or for a function player in the chain. Then, can’t our existing market or supply chain process mainly consist of conventional and information-based functional supply chain networks? ... Yes, it can and does. It will be easy to find this fact.
Then, what is wrong with those functional supply chain networks for the economy?
Like Taylorism or scientific management in production, this functional supply chain network was also developed to improve the efficiency of supply chains mainly through mass volume. Because it should be constructed by each individual supplier or function player for its own individual benefit, a comparative competition for more market share has been naturally constructed in the market as a market competition paradigm.
In this case, structurally, big companies with mass volume have positions in constructing more efficient supply chain networks superior to small companies with small volume, and existing standardized products made through mass production could be handled more easily and have better deals as well than new products mostly made through craft production. Moreover, only big companies could easily construct their own more efficient information-based supply chain networks. Since a seller’s customers typically are geographically scattered, and significant expense and effort are required to operate actual distribution functions such as warehouses and distribution centers, it typically has been very difficult and expensive for each company to develop such networks independently, even if they could use the same information technology.
As a result, the following situations have occurred in the modern information market or economy.
· Under the existing comparative competition situation for more market share, big companies with more efficient information-based supply chain networks have secured much more market share than usual, and accordingly, many small companies with less efficient conventional supply chain networks have lost much of their business.
· Because these more efficient information-based supply chain networks have been developed mostly by big companies and used only for their own benefit, the market entry of new products or new businesses developed by small companies and individuals has been structurally blocked. Only some new products or new businesses that were developed by big companies could have been easily introduced to the market on planned schedules.
· A more serious thing is that even if much of conventional mass production methods have been already transformed into more task-oriented optimization of work methods in the modern production process, this movement for more efficient information-based functional supply chain networks has even facilitated more the negative activities of Taylorist production such as off-shoring and outsourcing to lower labor cost countries, and adoption of robotic machines and automation process, and created more negative side effects on employment and income equality than before in the modern information market.
In this situation, even if the individual job creation capability has increased significantly, new jobs couldn’t have been actually created much, and the employment situation has instead steadily worsened in the Modern Information Age. Correspondingly, the self-generation and recovery capability of the market has also weakened gradually and continuously. As a result, the level of consumer spending has inevitably fallen, and at some point, a vicious cycle between the supply side and the demand side was created in the market or economy.
Therefore, with the existing functional supply chain networks, the more the Information Age has progressed, the more the employment situation has worsened, and policies aimed at improvement of the employment situation have been unsuccessful. Moreover, no matter how powerful the adopted expansionary economic policies and stimulus plans were, they have been ineffective and almost useless. They have even been harmful to the economy by creating and accumulating various abnormal economic phenomena in the market.
Then, what should we do? It is simple. We should change the existing functional supply chain process to a new supply chain process that could be more suited to the modern information market or economy.
Change to a new supply chain process? What is that, and how can we do it?
Craft Production vs. Mass Production
Many people still think mass production always brings more efficiency and productivity than craft production. Do you agree with this?
Let’s think of the exemplar of Toyota Motor Company. In the early 1970s, Toyota was in serious financial trouble, while its efficiency and productivity were very low. To get out of its financial trouble, Toyota had no other choice but to increase its efficiency and productivity. Thus, Toyota experimented with many different production methods within the existing mass production paradigm by making many trials and errors. But the results were always disappointing.
Finally, Toyota tested a new method, without any big expectation, that nobody ever tried before. The result was just amazing. Both efficiency and productivity increased significantly, and application capability also improved greatly. As a result, it easily overcame its financial trouble at that time, and has led the world automobile industry since then.
Toyota’s production system is known as a lean production system. Unquestionably, it is, but I think something more important is missing. I believe the true Toyota production system is a platform-based craft production system with a fair rule of competition.
Toyota workers are provided a production line as a platform with the same basic machines and a fair condition for competition, and each worker is treated as a craftsman and allowed to integrate all machines in the production line. In this situation, a worker has a clear responsibility for the productivity and application capability he produces, and he has a competitive relationship with other workers. Therefore, he will try to increase the productivity and application capability for each machine and the productivity capability of the whole production line in order to increase his own productivity and application capability. In other words, a competitive and cooperative relationship has been instituted between a worker and machines, and among workers. From the construction of these competitive and cooperative relationships, Toyota could finally increase efficiency, productivity and application capability. The increase was multiplicative, not additive, as we had in mass production on the Fordian model.
But it seems many people still worry about the effects of other factors in mass production such as off-shoring and outsourcing to lower labor cost countries, robotic machines and other automation.
Let’s assume that there was a street dancer. He loved dancing, and people in the street liked his dancing. But he had no idea how to make money with his dancing. One day somebody introduced him a famous TV dancing competition “So You Think You Can Dance”, and suggested he should participate in the competition. The producer provided a platform with the same basic facilities and training, and a fair condition of competition for all participants. The street dancer did his best by doing all kinds of duties (i.e., many different styles of dancing and choreographies) and became America’s favorite dancer.
On the other hand, there was a card-turner in a mass game. His job was just swiftly exchanging one card for another in a pre-scheduled manner. Because his job was so simple, he could be easily replaced by somebody else or even by a machine.
Let me ask you directly: If you have a chance, do you want to see the same mass game every time or to enjoy watching different styles of dancing performances in different times? I believe ordinary people would like to see a mass game once or twice at most, but to see different styles of dancing every time possible. Then, do you think a professional dancer could be easily replaced by ordinary people or even by a machine? I believe you never think so. Likewise, I believe that if the prices are the same, consumers will buy more craft products than mass products. Craftsmen cannot be easily replaced by robotic machines or automation, and their work cannot be easily made off-shore or outsourced to other places.
Therefore, it seems clear that, even if individual craftsmen are all different in their capabilities, if craftsmen are provided a platform with the same basic machines or facilities and a fair condition for competition, they could produce much more efficiency and productivity than those from mass production, and their works cannot be easily replaced or made by off-shoring or outsourcing, or robotic machines and automation.
A New Supply Chain Process for Job Creation
Toyota’s production system was developed before IT capability was advanced. Its communication totally depended on human intelligence. Most importantly, Toyota developed a fair condition for competition in its production line and secured appropriate efficiency to its workers by providing basic machines to all workers with a form of infrastructure. With this system, Toyota achieved the high increase of efficiency, productivity and application capability in its production line in multiplicative way. (“So You Think You Can Dance” competition also has the same principles as Toyota’s production system.)
Here an important question could be raised: “Can the principles of Toyota’s production system be applied to the supply chain process?” Yes, it is quite possible.
In the supply chain process, even if suppliers and customers are able to conduct direct transactions with the support of information systems, the delivery time and cost for real products are typically key issues to customers. To reduce the delivery time, a supplier’s product is preferably delivered to a location close to the customer, and its delivery to the final delivery point is performed in the fastest way possible. To reduce delivery costs, the delivery method of a product between its production point and its final delivery point is preferably performed in the most efficient way possible, and its final delivery point is preferably located as near as possible to the customer.
To realize these conditions, the market is divided into multiple limited market ranges, and information-based supply chain infrastructure as a platform with basic functions that would be provided to all suppliers and service providers. Also, suppliers or service providers could directly manage (i.e., integrate) the overall supply chain through a third party IT brain.
Delivery starting point for a product would be the first function in the limited market range with the customer, and the last function would be the final delivery point. Deliveries in the limited market range are preferably performed by the most efficient means available, and the cost will be shared by joined affiliated suppliers according to volume base. The centralized communication, volume and distributed expense would also facilitate the voluntary participation of outsourcing service providers.
Finally, then, efficiency will take place, and a fair condition for competition will be constructed for all suppliers and service providers.
In this situation, a supplier has a clear responsibility for the productivity and application capability it produces in the supply chain, and it has a competitive relationship with other suppliers. Therefore, it will try to increase the productivity and application capability for each function in the supply chain and the productivity capability of the whole supply chain in order to increase its own productivity and application capability. In other words, a competitive and cooperative relationship has been instituted between a supplier and supply functions, and among suppliers. From the construction of these competitive and cooperative relationships, each supplier would be able to achieve much higher efficiency, productivity and application capability than before.
As seen in the above diagram, if a supplier suggests an exceptional price such as $8 (Supplier D) in this new supply chain process with information-based supply chain platform, it will be able to secure all customers in the market. Even if it has a smaller profit margin on its product, it will potentially be able to make a much higher profit from centralized volume.
Then, what will other suppliers do? They will have no choice but to follow the price. At the same time, each of them will start developing new and more differentiated products. I believe this will induce the creation of new enterprises and jobs in all sectors of the market.
If this new information-based supply chain infrastructure is fully implemented in the market, the existing comparative competition paradigm for more market share would be changed to a new absolute competition paradigm for securing all customers, and the centralized communication, volume and distributed expense would induce the voluntary participation of all members of the market. This would significantly contribute to the improvement of employment conditions as a whole.
With the influence of this platform-based craft supply chain process in the supply side, the existing competition by size would be changed to a competition by quality and service. The existing efficiency-oriented mass production process and mass consumption would also be changed to a more effectiveness-oriented, diversified or individualized production and consumption system. Due to these changes, local employment conditions would be improved considerably, and the business environment for mid-size and small companies would also improve significantly.
As a mutually complimentary relationship is established between the supply side and the new platform-based craft supply chain process, job creation for middle- and lower-income people could be enhanced, and the polarized gap between poor and rich would also be moderated. This would, in the end, contribute to the improvement of the self-generation and recovery capability of the market.
These mutually complementary phenomena for the improvement of employment conditions could finally be transferred to a structural force to increase the level of consumer spending. This would create a virtuous cycle between the supply side and the demand side for economic recovery and revitalization.
Under this scenario, a policy for a working economic environment would be established, and no more expansionary economic policies would be needed. Thereafter, the federal budget deficit could be reduced, and many economic abnormalities could also be resolved naturally.
MGI said on June 2011 in a Report, An economy that works: Job creation and America’s future, “The United States faces an immediate challenge: finding employment for 7 million people still out of work from the 2008–09 recession and reviving robust job creation in the decade to come [and it] will need to create a total of 21 million new jobs in this decade to put unemployed Americans back to work and to employ its growing population.”
If this new information-based supply chain infrastructure is fully implemented in the market, can we find employment for 7 million people in a short period of time and create more than 21 million new jobs in the United States alone in this decade? Yes, it is quite possible.
This new information-based supply chain infrastructure could be a meta-platform in the real market process, just as the Internet is a meta-platform in information. Therefore, it has a potential to induce a supply chain revolution in the real market process, similar to the Internet Revolution in information. That is, numerous applications could be easily developed in the real market, based on unlimited imagination.
Moreover, as individual job creation capability has increased significantly in the Modern Information Age, I believe there is huge new business and job creation waiting in the market. If an easy, open and fair access to customers, such as this new information-based supply chain infrastructure, is provided, these forces will react immediately and create many new businesses and jobs in the market.
I strongly believe that this is one of the most viable and effective solutions for job creation in the Modern Information Age – and for the current economic crisis.
About the Author
Ho-Hyung (“Luke”) Lee (firstname.lastname@example.org ) is by training a lawyer, an international businessman and entrepreneur – and an inventor. He is currently the CEO of UBIMS, Inc. ("Ubiquitous Market System"). UBIMS, Inc., is a patent-pending startup with a cloud-based software designed to link manufacturers and businesses directly, provide time and cost savings in supply chains, and promote new job and business formation as outlined above, particularly in “A New Supply Chain Process for the Modern Information Market.”