Posts about efficiency

Geeks Bearing Gifts: Efficiency … The Final Cut

Here’s the next free chapter of Geeks Bearing Gifts about efficiency and news and ask what of journalism we must fight to save and what isn’t necessarily journalism or at least journalism we can’t necessarily afford anymore.

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Most discussions of the state and fate of the business of news start with revenue and a search for the means to recover what has been lost to the internet so we can pay for and thus protect newsrooms as they were. Sorry, but I will begin on the other side of the ledger with the cost of journalism. It has plummeted, not just because we have less money to spend but because we can now spend less to get and disseminate the news. Thanks to technology, specialization, and collaboration, news can be much more efficient today.

After exploring the many ways in which technology has saved the news business money since the ’70s, I add:

Even with all that disruption and downsizing, still greater efficiency and savings have been brought to news by the internet — particularly the web and its essential invention: the link, which rewards both specialization and collaboration. “Do what you do best and link to the rest” is my most quoted, retweeted, and PowerPointed utterance (it helps that it rhymes). Out of that dictum flows a series of new efficiencies and necessities for news. The first is to specialize. There’s little sense wasting your time writing the 25th-best account of a story when it will appear on the third page of a search request and in only a few tweets; mediocrity and repetition don’t pay anymore, at least not for long. But there is considerable value in creating the best, for others will end up linking to you. . . .

The link forces us to reexamine the scoop culture of news — the belief that being first is always worthwhile. Today the half-life of a scoop is measured in the time it takes to click. It simply doesn’t pay anymore to be the first to report what will happen in a press conference when that will then be reported by hundreds of competitors, each a click away. Neither does it pay to “match” a competitor’s scoop, duplicating its reporting when linking to it will do — unless your reporting does take a story further. A true scoop, something that is worth our precious resources, is an investigation that breaks new ground or an insight from a reporter who knows her beat and her community better than anyone else. The rest is just the next minute’s fishwrap, digital dust.

After exploring various efficiencies and trying to cut journalism and our definition of it to its critical essence (in which, for the sake of illustration, I will piss off sports reporters and even some foreign correspondents and, God help me, copy editors), I come to this:

The news organization of the future should be specialized, expert, collaborative, efficient — and as small as it can be so it is sustainable. The bottom line: News enterprises that become profitable on their digital revenue are bound to be much smaller than their print forebears because, for all the reasons explored above, there’s simply less digital revenue to be had. This hard fact forces us to redefine the core of our value and to rebuild from there rather than trying to hold onto the functions we used to perform because we’ve always performed them. We must cut the waste. . .

What are we trying to save of journalism? . . .

If you can’t wait for the rest of the book, then you can buy it here.

Efficiency over growth (and jobs)

The hook to every song sung at Davos is “jobs, jobs, jobs.” The chorus of machers on stages here operate under an article of faith that growth can come back, that they can stimulate it, that that will create jobs, and then that all will be eventually well.

What if that’s not the case? I am coming to believe, more and more, that technology is leading to efficiency over growth. I’ve written about that here.This notion is obviously true in some sectors of society: see news and media, retail, travel sales, and other arenas. But how many more sectors will this rule strike: universities? government? banking? delivery? even manufacturing?

As I write this, I’m watching a WEF panel moderated by Reuters’ editor, Steve Adler, with Larry Summers and government and business leaders. They’re discussing growth strategies and so far we’re hearing the same notions we hear elsewhere in Davos, the complete trick bag: spend money on infrastructure, be nice to business, regulate less, reform taxes, reform immigration. OK and OK.

“The problems of job creation are more complicated than that. They are more complicated than wealth creation,” says one of the panelists (operating under Chatham House Rule, so I won’t attribute*). “This is a group that understands wealth creation better than job creation.” He says “there are inherent limits” to the number of people employed in various sectors.

I haven’t heard any strategy yet that reverses the trends underway in the transition from the industrial economy to the digital economy. What will offset the shrinking of vast industries? New industries? Well, we have new, digital industries, but they are even more efficient than restructured old industries. Compare Google’s staff size to GM’s, even now. Facebook serves almost a billion people with the staff the size of a large newspaper. Amazon employes far fewer people than the bookstores it put out of business did. So those new industries will bring growth, profit, and wealth, but not many jobs.

“There are fewer jobs for regular people because those innovations happened than there would have been if those innovations hadn’t happened,” the panelist says. It would be “a delusion” to think that encouraging this innovation will increase jobs.

So what if the key business strategy of the near-term future becomes efficiency over growth? Productivity will improve. Companies will be more profitable. Wealth will be created. But employment will suffer.

I’m hearing no strategies focused on this larger transition in a gathering about the transition. I think that’s because the institutions’ trick bags are empty. They ran an industrial society. That’s over. And the entrepreneurs who will create new companies but also new efficiency aren’t yet in power to solve the problem they create.

I ask the panel whether all this talk of jobs, jobs, jobs is so much empty rhetoric. I ask whether there are other tricks in the bag.

The panelist I’ve been quoting says that there are two sets of economic issues: In the short term, for the next five years, we are dealing with demand and macroeconomic policy. “Employment today has nothing to do with the Kindle,” he says. “It has everything to do with the financial system, deleveraging, and macroeconomic policy.”

It’s in the long term that the issues I’m addressing here come to bear. “For the longer term, we don’t have nearly as good answers as we would like to,” he says. “We are going to have to embrace the idea that we are going to have growing numbers of people involved in the provision of fundamental services to other people, services like health care and education. We’re going to need to make that work for society.”

That is to say, health and education don’t directly create wealth; they are services funded in great measure by taxes of one sort or another. Employing people in those sectors amounts to a redistribution of wealth with the fringe benefit of providing helpful services. Is a service-sector economy the secret to growth? Who pays for that when fewer people have jobs in the productive economy? I still don’t see an answer. This is not an economic policy so much as it is a social policy.

Another panelist says that we will have fewer people and we will need to retrain people throughout their lives for new jobs. I agree. But that doesn’t create jobs (except in schools); it just helps fill the ones we have.

One more panelist, from Europe, suggests that nations here will end up making stuff for the growing economies and consuming middle classes of China, India, Brazil, etc. In a globalized world with maximum price competition, I’m not so sure that’s a strategy for growth, only survival. I’d hate to place my strategic bets on continuing — or returning to — the industrial economy. And at some point, that strategy bumps up against the question of sustainability: is there enough stuff to go around?

Indeed, in a globalized society, we need to look at total jobs, the sum of work and productivity and demand, not country-by-country. The question is: Will jobs on the whole increase in this digital economy?

If instead efficiency increases — and with it, again, productivity and profit — then great wealth can be created: see Google, and the technology economy. But that means the disparity of income and capital will only widen yet more. And it’s just wide enough today to cause unrest around the world. That’s much of what #Occupy_WEF et al is about. That’s what is causing such tsuris and uncertainty on the stages of the world (Economic Forum). That’s what is causing the institutions represented here to fear, resist, and regulate technology in the hopes of forestalling the change it is bringing. There is the root of the disruption we’re witnessing now even in Davos.

* I saw Summers later and he gave me permission to quote him by name. He is the quotable panelist.

User economy v. consumer economy

I’m fascinated with the services that are popping up in Italy – and now, I see, in the U.S. – enabling people to rent instead of buy things and to rent out the things they have: to share, in short.

The Washington Post writes about Zilock.com, Rent-instead.com, Chegg.com for textbooks, and Babyplays.com for toys (well-sanitized, one hopes). Not to mention the ultimate in sharing things, Zipcar.

I take a tour around my house and it’s hard to come up with a long list of things I’d only want to rent and no longer need to buy – tools, mainly, because I’m a klutz and try to avoid all handyman chores (whenever I tell people who know me that I’m using a chainsaw, they shudder at the thought). But I can imagine things I might not buy but would want to rent: a great digital camera or video camera, for example.

So I don’t see this phenom as a major force in the economy. I think we’re more likely to see sharing brought to assets like office space and equipment. Still, it’s just one more case of innovation yielding efficiency instead of growth.

Here’s the Post on these services:

Zilock.com came about like this: In the fall of 2007, a couple of friends in France were trying to hang something up on a wall and didn’t have a drill. They thought about buying one but somehow calculated that a drill is used only an average of 12 minutes in a lifetime. It made no sense to buy one, they argued.

“We were thinking about all of the drills lying around the building or the block and we had no access to it. We thought there are so many ways you can sell your things online but no way to borrow things,” Boudier said.

The peer-to-peer renting Web site first launched in France and Belgium. Once it took off, the founders expanded to the United Kingdom and the United States. Boudier, who is the U.S. general manager, said there are now 100,000 items for rent just in America. Not only are there drills up for grabs but infant car seats, camping gear, and digital cameras. “We are offering new ways for people to save and make money,” he said.