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In 1989, Bethlehem Steel was voted one of the best managed companies in America. Twelve years later they went bankrupt and in 2002, in an event as ironic as it is symbolic, the Smithsonian Institute purchased the Bethlehem steel plant for the purpose of converting it into the National Museum of Industrial History.
The story serves as a poignant reminder that the relentless forces of technology and competition threaten even the most formidable of businesses. The story also holds particular relevance to Minnesota because companies as diverse as Lawson, Medtronic, St. Jude's, Seagate Technologies, Imation, and Xcel Energy could potentially be rendered obsolete by exponential technological advances in a variety of fields.
Many business people are familiar with Moore's Law, which states that the number of transistors which can be placed on a computer chip doubles every 18 months. This seemly simply law has increased the number of circuits on a chip from a mere 2,400 in 1973 to over 200 million today. Next year, the latest chip will have 400 million transistors.
Executives in the semiconductor industry liken the situation to running on a tread mill that doubles in speed every year and a half: if they slow down or make a misstep, they know they are out of business. But this is just one example of exponential growth. Everything from data storage, bandwidth capacity, molecular manufacturing, DNA analysis and the sequencing of the human genome is also experiencing similar explosive trends.
What does this have to do with Minnesota? In a word: everything.
Exponential advances in data storage threaten to disrupt the businesses of Seagate technologies and Imation. Exponential advances in the efficiency and effectiveness of solar cell and fuel cell technology portend the day when cheap, clean, sustainable energy can, quite literally, be generated at a person's home. The implication for Xcel, which continues to rely heavily on nuclear power and coal for the generation of electricity, is that their business model may not be sustainable.
Medtronic and St. Jude's face similar situations. Advances in stem cell research, DNA analysis and the sequencing of the human genome point toward a day when disease is not treated after it has occurred; rather it is prevented before it ever occurs in the first place. This suggests that entire product lines for these companies (as well as the hundreds of other medical device companies in Minnesota) may literally evaporate overnight.
How is Minnesota to respond to this brave new world? One common approach is to try and select an emerging field such as biotechnology and concentrate precious public and private resources at that area in an attempt to get ahead of the curve and position Minnesota as a leader. Another option is to provide tax incentives, such as Governor Pawlenty's JOBZ initiative
They are not altogether bad plans. Unfortunately, they are unlikely to provide the expected gains because virtually every other state in the country - not to mention numerous foreign countries - is already pursuing similar initiatives. The proverbial economic pie will merely be sliced into thinner pieces.
The better and more realistic answer - although not a particularly political "sexy" answer - is that the state needs to focus on education and, specifically, science and math education. The reason is because regardless of the exponential trends which I have identified there are two common elements. One, advances are being fueled in each area by an enhanced understanding of the physical world at the molecular level; and, two, the primary tool for developing these advances is sophisticated computational modeling software.
These facts lead me to suggest that if Minnesota is truly interested in economic development for the first part of the 21st century, the state needs to develop a comprehensive plan for ensuring that our K-12 and post-secondary curriculum -- as well as worker retraining programs -- be directed at providing Minnesota citizens a world-class education in the hard sciences of physics, chemistry, engineering, biology, mathematics and the computer sciences. And by world-class, I really mean world-class. The fact that Minnesota consistently ranks at the top for math scores in the United States means nothing - absolutely nothing. Minnesota's workforce is competing less with our neighbors in Iowa and Wisconsin and more with young workers in Bombay, Shanghai, Helsinki and Stuttgart.
As the material world moves to the molecular scale and information can be digitized and rapidly transported around the world for virtually no cost, production will, in the short-term, continue to move to where labor is cheap - much as many computer programming jobs are already moving to India (as many recently laid software developers at Lawson could tell you.)
Longer-term, as skilled labor costs equalize, production will move to where the human capital resides. And by 2015, it is estimated that 90 percent of the world's scientists will be educated outside of the United States. Which means that tomorrow, if stem cell researchers in Helsinki can grow human hearts and pancreas, Medtronic's cardiac heart disease and diabetes divisions may be history. If nanotechnology allows businesses in Bombay to create and produce roof shingles with solar cells embedded in them, Xcel's demand for energy will plummet. And if researchers in Shanghai or Stuttgart master atomic storage resolution to create a compact disk capable of storing the entire content of the Library of Congress; the need for Seagate and Imation's products may vanish.
All of this may sound fantastic, but does it sound any more unrealistic than the Bethlehem Steel plant being converted into the National Museum of Industrial History?
The future is going to look radically different than it does today and Minnesota's competitive advantage lies in the hard sciences. Our leaders need to not only understand this fact, they need to both educate the public about the need to dramatically beef up our skill levels in these fields, and then provide the necessary resources to help the citizens of Minnesota develop the knowledge and skills with which they can continuously create - and recreate -- the new Minnesota.
Jack Uldrich is the author The Next Big Thing is Really Small: How Nanotechnology is Going to Change the Future of Your Business and the former chair (and current vice chair) of the Independence Party of Minnesota. His next book, Into the Unknown: Leadership Lessons from Lewis & Clark's Daring Westward Adventure is due out this spring.
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