Lessons from Bell Labs

In today’s NYT, we’ve got an important article lauding Bell Labs, with the headline “True Innovation: We should emulate Bell Labs, which took the long view, with a preference for usefulness.” Jon Gertner writes:

…we idealize America’s present culture of innovation too much. In fact, our trailblazing digital firms may not be the hothouse environments for creativity we might think. I find myself arriving at these doubts after spending five years looking at the innovative process at Bell Labs, the onetime research and development organization of the country’s formerly monopolistic telephone company, AT&T.

Why study Bell Labs? It offers a number of lessons about how our country’s technology companies — and our country’s longstanding innovative edge — actually came about. Yet Bell Labs also presents a more encompassing and ambitious approach to innovation than what prevails today. Its staff worked on the incremental improvements necessary for a complex national communications network while simultaneously thinking far ahead, toward the most revolutionary inventions imaginable.

Indeed, in the search for innovative models to address seemingly intractable problems like climate change, we would do well to consider Bell Labs’ example — an effort that rivals the Apollo program and the Manhattan Project in size, scope and expense. Its mission, and its great triumph, was to connect all of us, and all of our new machines, together.

Gertner is the author of the forthcoming “The Idea Factory: Bell Labs and the Great Age of American Innovation.”  He goes on to talk about how innovation was structured at Bell Labs, and what we can learn from it.It’s a really good piece. Gertner does a deep dive on issues that I just touched on in my December 2011 paper  ”Scale and Innovation in Today’s Economy”. The key is that in their own way, big companies can be just as innovative as small companies, and perhaps more so.  We may need a return to the era of big, systematic innovation.

Lessons from the App Economy

My latest Atlantic.com column is entitled “What the App Economy Can Teach the Whole Economy.”  Take a look.

App Economy is ‘job leader’ into the future

Last spring Technet asked me to examine the size of the ‘App Economy’, focusing on the number of jobs being created.  The official job statistics from the BLS were no help, given the speed at which the App Economy was evolving.  Instead, I developed an innovative methodology for using a ’21st century’ database, The Conference Board Help-Wanted OnLine, to track App Economy jobs.

The study, “Where the Jobs Are: The App Economy,”  has just been released by Technet. I found that

 App Economy now is responsible for roughly 466,000 jobs in the United States, up from zero in 2007 when the iPhone was introduced. This total includes jobs at ‘pure’ app firms such as Zynga, a San Francisco-based maker of Facebook game apps that went public in December 2011. App Economy employment also includes app-related jobs at large companies such as Electronic Arts, Amazon, and AT&T, as well as app ‘infrastructure’ jobs at core firms such as Google, Apple, and Facebook. In additional, the App Economy total includes employment spillovers to the rest of the economy

I want to make several points here.

• In earlier research done for the Progressive Policy Institute, I looked at ‘job leaders’–industries that, coming out of recession,  manage to create new jobs  well before the rest of the economy.  I found that the industries which are the job leaders during a recession tend to be the big drivers of the expansion that follows. So during the recession of 1990-91, the job leaders were infotech services such as software, computer systems design and data processing services, all of which turned out to be big job creators in the tech boom of the 1990s.  Similarly, the job leaders in the recession of 2001 were finance, real estate, and residential construction, signalling the housing and financial job growth from 2001-2007
• Today, the App Economy is clearly a job leader. It managed to create jobs during the worst recession since the Great Depression, suggesting that the App Economy will be a major driver of  job growth during the coming expansion.
• The App Economy cross-cuts industries, including  leading internet companies such as Google and Facebook, hardware/software developers such as Apple and Electronic Arts, smaller app developers,  and wireless providers such as AT&T.
• State and local governments that want to participate in the coming expansion should think about encouraging App Economy jobs. The methodology I used enabled me to identify App Economy jobs by state and MSA. Much more could be done along these lines.
• The federal government needs to adopt policies to encourage App Economy growth. More about this in my next post.

Gain in Tech Help-Wanted Ads: Good News for Labor Market

After months of stagnation,  labor demand appears to be perking up again, according to the latest data from The Conference Board Help Wanted Online report. Led by gains in ads for tech jobs–otherwise known as computer and mathematical occupations–companies have boosted their demand for workers for the past two months, according to The Conference Board.

It’s fascinating to compare the number of want ads to the number of unemployed workers in different occupations. In tech occupations, there are almost 4 want ads for every 1 unemployed worker. That’s good odds!  And in fact, the unemployment rate for tech occupations dropped from 5.3% in December 2010 to 3.6% in December 2011.

By contrast, in education, training, and library occupations, the ratio is 1 want ad for every 4 unemployed workers. That’s far less favorable, and labor conditions appear to be getting worse. The unemployment rate for education, training, and library occupations rose from 2.7% in December 2010 to 3.3% in December 2011 (not seasonably adjusted).

When the January employment report comes out tomorrow, I will be looking for signs that the tech sector is continuing to lead the labor market out of its slump.