The Future of Outsourcing

Recently I had the chance to sit down with Kate Vitasek, author of the new book, Vested Outsourcing, with Mike Ledyard and Karl Manrodt. Outsourcing is a controversial but fundamental business activity - as Kate notes Peter Drucker used to say "Do what you do best and outsource the rest," and the idea of finding people who can do something better, faster and cheaper than you goes all the way back to Adam Smith and beyond.

In recent history outsourcing has become conflated with off-shoring. Having some other company do your IT work, your PR work, your janitorial work, and so on, does not mean, necessarily, sending that work out of the community or overseas. Though of course, in practice it often does just that. I support policies that would limit off-shoring and certainly would not reward it. And, in general I believe that the future well-being of the economy depends on building more local capacity within a global economy.

Leaving the issue of off-shoring aside, however, there is a great deal to learn from Kate and the concept of Vested Outsourcing. The goal is to make outsourcing a win-win-win proposition when practiced. That is, if done right outsourcing a particular function should lead to cost savings for the company outsourcing, higher margins for the company that gets the work, and better service for the customer. That is the goal of Vested Outsourcing, and this is accomplished by implementing five basic rules explained in the book.

1. Focus on outcomes, not transactions.
2. Focus on the WHAT, not the HOW.
3. Agree on clearly defined and measurable outcomes.
4. Optimize pricing model incentives for cost/service trade-offs.
5. Governance structure provides insight, not merely oversight.

These rules add up to a constructive, mutually beneficial relationship between the companies involved. The research done by Kate and her colleagues at the University of Tennessee demonstrates that outsourcing following these rules lead to such a relationship.

My take on all this is that some outsourcing is inevitable and optimal and, given that, it ought to be done well.

[Video production: David Ryder]

Right on Economic Growth

Now and then it is nice, as a futurist, to see that something you forecast and expected is coming to fruition, especially when what you said ran counter to a lot of common wisdom. Two economic announcements today confirm what I was saying about Microsoft in the middle of last year, and about the U.S. economy in, for example, my Outloook 2010.

First, it seemed clear to me that even as Microsoft stock was sluggish over the past year, they had three initiatives poised to return them to growth and increased profitability. These initiatives include touch computing, gesture based interactivity, and of course Windows 7. It was obvious that Windows shops around the world that had skipped over Windows Vista would very likely shift to Windows 7 as it proved itself. They cannot wait any longer. With the results that Microsoft reported today, we can see this happening, and the 2010 story will be bigger. I've heard insiders at a very large multinational, still operating with XP, say that the plan is to shift to Windows 7 beginning in the second half of 2010. Huge.

As for the U.S. economy, in my speech to the 125th anniversary of a Chamber of Commerce in November 2009 I turned some heads by saying that GDP growth in the 4th quarter would surprise people by coming in around 6%, and that this would bode well, eventually, for growth in employment in 2010. So far so good as 4th quarter GDP growth was the best in six years.

Future of Health Care Reform in U.S. Now

The standard chorus today, following a win by Senator Elect Brown in Massachusetts, is that health care reform is either dead, or must be substantially revised to be passed into law.

I don’t know that it is dead, but it is on life support.

Somehow, in the very long process of developing the current legislation, the simple messages of improving access, covering everyone, and controlling costs, got lost.

Now, what is the way forward if you think that for the U.S. to be #1 in the world in health care spending but #37 in quality, with tens of millions uncovered, is not a good thing?

I think, and admit I missed this early on, that the simple solution would be best. This might be a piece-meal approach, or even better it could be this from Ezra Klein at the Washington Post:

“Medicare buy-in between 50 and 65. Medicaid expands up to 200 percent of poverty with the federal government funding the whole of the expansion. Revenue comes from a surtax on the wealthy.

And that's it. No cost controls. No delivery-system reforms. Nothing that makes the bill long or complex or unfamiliar…”

Not likely to happen, but it would be a wise option.

Glen Hiemstra is a futurist speaker, author, consultant, blogger, internet video host and Founder of Futurist.com. To arrange for a speech contact Futurist.com.

Our Future In Space

I grew up in space.

Not literally, obviously, but in my sense of future possibilities. When Colliers and other magazines in the 1950’s featured the Von Braun space station on their covers – the great wheel in space that became an iconic image – this locked in for me a life-long interest in space exploration. For a short time in the 1960’s I imagined being an astronaut until it was clear I was too tall for that, not to mention the rigor of qualifying. Later, as explained in the story of Futurist.com my original futurist mentor came from the Apollo program.

So, you might understand why I get frustrated with the agonizingly slow expansion into space. Now my colleague, Brenda Cooper, advises me that when looked at in galactic time, progressing from the Wright Brothers to missions to planets and human missions in orbit and for a while to the moon, all in 107 years, is pretty impressive and probably about fast enough. True.

Still, when I read that over and over again this and other nations are unsure, at the national government level, how much to invest I wonder how we can miss seeing the opportunity, or even the necessity of becoming a space-faring civilization (according to Stephen Hawking). There will never be lack of earth-bound problems to distract us, but at the same time there is never a lack of the relatively small amounts of money required to, for example, send people to Mars or even to begin terraforming.

My hope is that we see the space imperative more clearly in years to come.

Glen Hiemstra is a futurist speaker, consultant, blogger, internet video host and founder of Futurist.com. To arrange for a speech contact Futurist.com.

Future of Sports – quoted in New York Times

Among several New Year articles for which I was interviewed, and which I'll summarize tomorrow in addition to laying out my outlook for 2010, this New York Times article by Harvey Araton stands out. Mr. Araton is a features columnist who asked what may happen with pro sports in the next decade. See "2020 Vision."

Hydrovolts offers electricity of the future

You have a chance to vote for the Inc.com new entrepreneur of the year in the next 24 hours, and here is why I suggest you vote for a Seattle, Washington based company called Hydrovolts.

Last week co-founders Chris Leyerle, COO, and Burt Hamner, President, sat down for an hour with me, and explained their technology and business plan – I had seen them earlier at entrepreneur events this year.

The idea is simple, elegant. The world is laced with irrigation canals, both ancient and modern. Many are completely lined with concrete or stone. Many have access roads and power lines along them, in part to service pumps. Into these canals, not to mention free flowing streams, Hydrovolts proposes to drop rotating drums using what they call a “flip-wing” design. The rotation will spin magnets over a coil, and thus you have a simple electric generator.

You can see tests of the prototypes at the Hydrovolts YouTube channel.

This is such a good idea, it is surprising that it has not been done. It is simpler and less expensive than tidal power, or low-head hydro, and by targeting canal systems first, Hydrovolts avoids most of the environmental issues faced when using free flowing streams (though ultimately there is more capacity in streams and rivers). There are good prospects for development partners, for example the thousands of public and private irrigation districts in the U.S. alone.

Most surprising to me was the electricity potential – Hydrovolts drum generator, suspended approximately 10 per mile of canal or stream could generate 5-10 kilowatts each, (an average home uses about 1.5 a day), and when you then imagine canals many miles long, the total capacity is quite large. The potential energy increases as the stream speed increases, and even greater efficiencies can be gained by placing the flip-wing generators in the falling water of low-head spillways typically of many canal systems.

Hydrovolts was selected last week at the Pacific Northwest Cleantech Open as one of three finalists to be sent to compete for the national prize.

Check out Hydrovolts, and go to Inc.com to vote for them as new entrepreneur of the year.

Zino Society Investment Forum – Winners and My Keynote Speech

I had a great time yesterday at the Zino Society Zillionaire Investment Forum, at the Four Seasons Hotel in Seattle. I had the privilege of delivering a brief keynote speech. The Forum was an opportunity for 28 entrepreneurs to present the investment case for their companies, competing for two investment prizes of $50,000, as well as for exposure to an audience of investors.

The Zino Society, brainchild of CEO Cathi Hatch, bills itself as the premier membership, business and social network in the Puget Sound area to connect accredited investors with entrepreneurs seeking funding. After attending this event, their major conference but just one of many events the Zino Society staff delivers annually, it can be said that they live up to their billing.

Each of the 28 companies was well prepared, they represented a surprising variety of market opportunities from deck-rail construction to laser-based materials assessment, to turbine-powered electricity, to several internet plays to organize package delivery, enable better ride sharing, or improve online media.

In my keynote speech, I noted that as a result of hearing these enthusiastic business leaders talk about their dreams, I was feeling much more optimistic about the future. The heart of what I offered was a call for transformative entrepreneurship, that focuses not just on making money but on making a difference. To accomplish that entrepreneurs need to be future oriented, vision driven, collaborative, and strategic. And I noted in closing they need to have fun – the reason most of them began their dream in the first place.

After the presentations a panel retired to select 6 finalists, three technology plays and three non-technology opportunities. These will be subjected to due diligence for the next month or so, at which time the two winners will be announced.

I generally agreed with the top 6 selection, who were:

Technology Finalists…

Photon Machines, Inc.: Laser-based material measurements to speed decision making and analysis from the geochemical lab to material and energy intensive process control. Basically, point a laser tool at any material and in seconds analyze what it is made of.

Enroute Systems Corporation: using Internet and software to ship packages more efficiently. Their systems enables customers and shippers to select the most cost effective method, something you would think is easy now, but is not.

GiftTango Corporation: providing online and retail merchants the ability to offer gift and membership cards to any internet connected device. Buy a gift card online, and it appears as an image on your cell phone, and later show the phone image in a store to make a purchase.

Non-Technology Finalists…

MicroGREEN Polymers, Inc.: giving the plastics industry and the world economically and ecologically viable advanced plastics technology to promote sustainable living. Basically they create plastic with air bubbles, using far less material, encouraging cradle to cradle recycling.

Zero Crossing Engineering: provides integrated tuning solutions for the musical instrument industry. Install their automatic tuner, costing less than $100, on an electric or acoustic guitar, and the musician can quietly and perfectly tune the instrument while on stage.

Harbor Wing Technologies, Inc.: robotic wind-driven unmanned surface vehicles for defense missions, and computerized WingSails for commercial and recreational boating.

Other companies I particularly liked (and I liked every single one to be honest) include:
Ballentine Railing, LLC. – modular steel railing system
CoreWerks – new chairs to resolve low back pain
Drop Station – banks of lockers to receive shipments. My 2009 client Grainger Inc. an early customer
EnergeticX – making ride sharing safe and easy
Grace & Game, LLC – fashionable golf clothing for women
Hydrovolts – a simple rotary turbine placed in irrigation canals to produce electricity – I would have made this one a winner. A really great idea not just in the U.S. but in the developing world.
Journey Gym – briefcase size portable gym, targeted for every hotel room.
Julep Nail Parlor – do we need more nail parlors – yes we need this one from an ex Starbucks exec.
Light-Based Technologies – control systems for LED lights.
Oasis Diagnostics – Using saliva specimens instead of blood samples for diagnostic testing, faster and less painful and complex.

To read about these and other companies in this year’s competition, visit either the Zino site, or a summary at an event co-sponsor, the Puget Sound Business Journal.

Glen Hiemstra is a futurist speaker, consultant, blogger, internet video host and founder of Futurist.com. To arrange for a speech contact Futurist.com.

The Prince and The Frog

The Prince and the Frog – it’s not what you think.

Prince Charles envites you to embrace the frogs, and in doing so save the tropical rain forest. It’s not a fairy tale, but an SOS to save a crucial part of the planet, upon which we all depend.

The rainforests, where these frogs live, are the lungs of the planet. Not only do they produce a majority of the world’s oxygen, the tropical forests also act as carbon sinks, sequestering approximately 20% of greenhouse gas emissions internationally. But now, the voracious speed of rainforest destruction, coupled with the emissions produced in the course of the deforestation (which, on a global level, amounts to more greenhouse gas emissions than the entire international transportation sector combined!), are pushing us ever closer to a point of no return.

So Prince Charles wants you to take a good look at that frog. It’s the mascot for the Prince’s Rainforest Project. We’ve known about the Business and Environment Programme offered through Cambridge University/Prince of Wales College for awhile – I participated in one of the North American gatherings last summer. This initiative to save the rainforests is more targeted, and, if possible, even more urgent. If the tropical rainforests become too compromised, other efforts to mitigate the effects of climate change, or to slow its progress, will likely fail. As go the tropical rainforests – and their frogs – so go we, Princes and all.

The UN Copenhagen Climate Change Conference, coming up in December, will address a program to provide financial incentives to reduce rainforest deforestation. Reducing Emissions from Deforestation and forest Degradation (REDD) will help to lay out the ground work for a transition to more sustainable activities. However, the implementation will be years off. And we don’t have that time.

In the face of this, after a meeting of world leaders in London last spring, hosted by Prince Charles, the Informal Working Group on Interim Financing for REDD (IWG-IFR) was formed to address this crucial gap.

And now, the Prince—and his frog—are sending you a SOS asking for your support for these emergency interim measures to curb deforestation, and to help spread the word on the connection between tropical deforestation and climate change. We have joined in our support of this, and urge you to do so as well (www.rainforestsos.org). They are working to gain one million signatures. You can join at Futurist.com (see the form below or link on the home page), or at their site. See the nice series of YouTube videos as well, with celebrity/frog cameos.

Sign up. This is a cause worth supporting. Let’s make this one story that ends happily ever after.

Glen Hiemstra is a futurist speaker, consultant, blogger, internet video host and founder of Futurist.com. To arrange for a speech contact Futurist.com.

Future of Health Care Reform in U.S., by Glen Hiemstra, Futurist & Speaker

Yesterday marked the death of Senator Edward Kennedy. This event turned my attention even more to the subject of health care reform in the United States. Early in the year, responding to Time Magazine, I suggested that health care reform was a fundamental innovation to help move us beyond the recession. I have little doubt that is true.

So, in a longer-than-blog-length article, I outline my experience and prediction regarding health care reform in the U.S. My prediction?

Prediction:
Health care reform with all four of the features I list will pass the House and the Senate. The House version will have a stronge public option, the Senate version a weaker one. The President will be forced to indicate his preference and he will side with a stronger public option, which will come out of conference committee. The house will pass it in a party line vote, the Senate will pass it in a near party line vote after parliamentary maneuvers allow a majority rather than a super majority vote. It may take until November but more likely will be done sooner.

This is almost inevitable, virtually guaranteed, no matter what you read or see in the press on a given day.

To understand why I believe this prediction is also a preferred future, check out this article at futurist.com.

Our Future in Space, after Apollo 40 Years Ago

Before this day, the 40th anniversary of the Apollo 11 landing on the moon, is over, I want to recognize a person who played such a key role in that endeavor, Ed Lindaman, director of program planning for Apollo at Rockwell. The fact that Ed was the inspiration and mentor who led me to become a professional futurist is secondary to the reason I recognize him today. Rather it is for his role in Apollo.

As I write, I am watching on the TV (C-Span) Buzz Aldrin as he speaks (recorded) to the anniversary event last night at the Smithsonian Air and Space Museum about our future in space. Preceding him was Kris Kraft, who was also a key leader in Apollo. They both go out of their way to recognize the thousands of people who worked in the design studios and the manufacturing floors to accomplish the mission.

Here is a story that Ed used to tell. As they worked on Apollo at Rockwell he instituted a closed-circuit TV program within the company. Each week or each day Ed would go personally to interview someone working on the project – say a person placing screws into the module. Ed would explain how this small act was critical to getting to the moon – instilling in each person a sense of personal mission. He always felt that was one of the most important things he did as director.

Aldrin in his speech just now pointed out that it was 66 years from the Wright brothers first flight to the landing on the moon. From July 20, 1969 if we add another 66 years it will be 2035, and Aldrin advocates missions to asteroids and to Mars by then. Third up is Michael Collins, Command Module pilot. He is also advocating Mars, and points out that when they went to the moon the Earth population was only 3 billion, compared to over 6 billion now, and he calls for better treatment of the planet as he also advocates for space.

When Armstrong and Aldrin landed that day in 1969, I was life guarding at Rooster Rock state park on the Columbia River. I made sure the radio broadcast was sent over the public address system, and we all listened on the beach as Eagle landed. Later I watched the replay with Walter Cronkite. It was a special day.