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An economy in transition.

The 1990s promise techno-economic revolution. To prosper, you must adapt.

During this decade, we will be passing through the midpoint of a genuine techno-economic revolution. If we - as individuals, institutions, and communities - are to thrive and prosper in the 21st century, we first have to manage our adaptation to the revolutionary realities of the 1990s. These realities set a strategic agenda for business and community leaders as they make their policies, commitments, and investments for the decade ahead.

Seven great realities

* Reality 1: U.S. productivity has grown slowly for 25 years.

Consequence: The standard of living for most U.S. households and sales of U.S. goods and services will decline during the 1990s if we do not substantially improve productivity. * Reality 2: Investment and development in communication technology has set the stage for a decade of powerful and practical information systems and services.

Consequence: Increasingly, economic productivity and personal well-being will depend upon the ability to use information and information technology. * Reality 3: The only consistent way to improve productivity is to bring more and better information to bear on all types of problem solving and decision making.

Consequence: The information content of every job will have to be substantially increased. * Reality 4: Techno-economic transitions take one to two generations, during which productivity and general levels of overall prosperity temporarily decline before they rise.

Consequence: A 15-to-20 year decline in average weekly wages will continue into the 1990s. * Reality 5: A growing number of individuals per household will be forced to seek employment in a job market in which a severe labor shortage will force employers to hire essentially all people with productive skills.

Consequence: Employment of the wide variety of adults seeking work will require fundamental changes and innovations in traditional work practices and arrangements. * Reality 6: Improving U.S. productivity depends upon a substantial increase in the communication, computation, and reasoning skills of all Americans.

Consequence: We must substantially improve public school performance, educationally retrieve millions of marginally skilled adults and displaced workers, and improve the skills of current employees. * Reality 7: Traditional management systems restrict significant discretionary decisions to upper-echelon managerial and executive positions.

Consequence: Massive investments in new workplace technology and human resource development will be largely wasted if we do not also empower employees at all levels to act upon the information at their disposal.

Productivity risks

A combination of long-term trends makes it clear that the 1990s will confront America with a productivity crisis of historic scale and significance. Since 1965 U.S. economic productivity has grown at less than half the rate of the preceding 20 years (1.4 percent a year since 1965 vs. 3.3 percent annual growth from 1945 to 1965).

Lower productivity growth has restricted wage increases and required most U.S. households to have two or more incomes to sustain a middle-class lifestyle. A persistent trade deficit, the loss of U.S. jobs to foreign competitors, a shrinking public revenue base, and the resulting public sector austerity are all major problems that can ultimately be attributed to our low rate of productivity growth.

The effects of the U.S. economy's poor performance have been exacerbated by the fact that the world's other free-market industrial economies - Germany, Japan, Britain, Italy, and France - have all increased their productivity at twice the U.S. rate or better during the last two decades. Worse yet, the newly industrial Third World nations are expanding their presence in the international marketplace both by their improving productivity and their rapidly growing pools of low-cost skilled labor.

The low work force growth rates of the mature industrial economies will be a new problem for the United States during the 1990s. From the mid-1960s to the mid-1980s, America's labor pool grew much faster than that of other mature industrial nations because of our post-World War II baby boom. Little marketplace incentive existed for U.S. producers to pursue productivity-enhancing research or labor-saving capital investment. By comparison, in the 1990s, because of the low birth rate of the baby bust years (1965-1980), the U.S. labor force will grow almost as slowly as that of most of its mature industrial competitors. We will be left on a level playing field with our traditional competitors: Western Europe, Japan, and the British Commonwealth Meanwhile, after unification of the European Community in 1992, Western Europe will acquire advantages of economies of scale in marketing and capital formation previously enjoyed only by the United States.

If America's high-value goods and services are to remain competitive both at home and abroad during the coming decade, the United States will have to at least double its productivity growth during the 1990s. All U.S. institutions, both private and public, must increase their productivity to beat foreign competition and to maintain the quality of life to which Americans have become accustomed.

High-tech innovations

As the world's most productive nation during most of the 20th century, America presumably possesses some insight about how to improve its own economic performance. Our past successes in inventing and employing new workplace technologies to increase productivity have led us to continue to rely on high-tech solutions.

During the 1980s, American industry spent an estimated $200 billion on productivity-enhancing manufacturing technology. We spent more than twice that amount on new information technology, such as communication satellites, electronic mail, expert decision systems, and computer-aided design.

In spite of this massive capital expenditure, overall productivity by U.S. workers rose only 0.9 percent during the 1980s. What's worse, the average per capita output of U.S. information workers actually fell between 5 percent and 10 percent.

This apparent failure of high technology to immediately produce high performance can initially be attributed to the sheer size of our economy and the magnitude of our undertaking: to effectively integrate information technology throughout all levels of productive enterprise.

As with previous stages of America's techno-economic development, the broad application of computers and electronic communications to our huge, labor-intensive information sector will take several decades.

Using computers to tap into our vast bodies of specialized knowledge and experience-based expertise first required America to develop an info-structure. During the past 20 years, private and public institutions made massive capital investments in communication satellites, electronic networks, data bases, and the like. Now that the basic info-structure is in place, many of the long-envisioned features of the information age will finally begin to sweep into our daily lives during the 1990s.

The facsimile boom offers us a taste of what is to come. In 1985 there were fewer than 300,000 fax machines in the United States. By 1990, there were 5 million. The fax phenomenon will be repeated many times during this decade. For example, voice mail and electronic conferencing will largely displace internal written communication in most large enterprises.

Cheap, accurate digital-graphic scanning will make the conversion of paper files to electronic media economically attractive by the mid-1990s. During the second half of the decade, speech recognition will be good enough that keyboards will no longer be needed for user-computer interaction for most preprogrammed tasks.

Futurist John Naisbitt first suggested that the info-structure developments of the 1980s would set the stage for the 1990s to be the bypass decade. The quality and convenience of electronically delivered services would become so good, Naisbitt asserted, that they would begin to influence consumers to bypass the traditional institutional sources of such services. Consider, for example, the advent of tele-learning.

Electronic education delivery systems, which allow students to take courses from their homes and offices using computer networks or specially equipped two-way televisions, will permit all forms of adult learning to be more thoroughly integrated with everyday life and work. During the 1990s, America's immediate national need to upgrade and retain most of its work force will be directly addressed by an array of increasingly powerful and sophisticated combinations of information technology with applied learning theory, ultimately leading to the creation of a new American adult education system.

Just as the mounting need for employee training and adult education will promote unusually rapid applications of new tele-learning technologies in the coming decade, so too will a variety of changing realities increase the popularity of tele-commuting or working from home. The projected doubling of commuting time and the maturing of preschoolers into latchkey children who need adult supervision are just two of the factors that will provide salaried employees incentives to work at home.

The 1990s will also produce a wide variety of electronic innovations - from talking appliances and cashless shopping to programmable assembly lines capable of manufacturing custom-designed clothing and houses at mass-production prices. The production of such sophisticated goods and services by such sophisticated processes, however, cannot be achieved simply by equipping rank-and-file workers with high-tech information systems. This traditional approach to productivity improvements fails to recognize that nearly half a century of industrial automation has sharply reduced the numbers of employees engaged in direct production.

Today more than half of us are information workers employed in managerial activities. Using information technology to increase productivity therefore requires a focus on management.

Emphasis on producer services

A 1987 study conducted by the National Academy of Sciences concluded that management actually adds to the bottom line through the productive power of its professional and technical contributions. If found that most information workers are engaged in "producer services," which are the principal source of value added by the U.S. economy. Producer services include planning, research and development, recruitment, employee training, sales and marketing, advertising, and product design.

Since producer services are the dominant source of the value added by our economy, producer services should be the principal focus of our efforts to improve productivity.

In fact, the business press and professional journals report a growing number of productivity-enhancing accomplishments made possible by producer services. Engineers at NCR, Inc., for example, redesigned their new cash registers to have 85 percent fewer parts purchased from 65 percent fewer suppliers to reduce assembly time by 75 percent.

The capacity of applied knowledge and expertise to improve performance is scarcely new to the information age. New information-communication technologies, however, now enable us to capture, store, retrieve, analyze, transmit, assimilate, and distribute all forms of knowledge and information with unprecedented speed and precision. Those enterprises in each industry or profession that are able to fully use newly available information to improve their plans and decisions will enjoy considerable advantage in the marketplace.

To meet this challenge, the information component of practically every job in every organization has to be expanded. Rank-and-file workers, for example, are being taught sophisticated analytical skills so that they can help engineers redesign production processes. Originally developed for the shop floor, teamwork is now being used to streamline administrative procedures in both private and public organizations.

The technology needed to bring more, better, and timely information to bear upon decisions at all levels of organizations will be readily available in the 1990s. To fully use the productive power of information technology, however, organizations must redesign their management systems and decision-making processes to enable employees to take direct, timely action based upon the newly available information. The key is teaching managers and employees to use information and empowering them to act on it.

The price of progress

History suggests that true techno-economic revolutions take at least 40-50 years and that during the first half of such technologic transformations, general economic well-being declines before it rises.

Since the early 1970s, more than 6 million U.S. skilled blue-collar jobs have been eliminated. Since the early 1980s, an additional 2 million middle management, salaried professional and technical positions have been removed from U.S. payrolls. As a consequence, average weekly wages in America have fallen by about 20 percent since 1973. Given the current pace of our economic restructuring, this decline is likely to continue.

If the historical model of previous techno-economic transitions applies to this moment in U.S. history however, some time during the second half of the 1990s the numbers of new high-value jobs should finally begin to grow faster than the number of high-value jobs eliminated from the old-style production and management systems. By 2010, proportionally more high-value jobs should exist in America than when the transformation began in the 1970s.

Everybody into the labor pool

The principal social response to falling wages during the past 15 years has been for families to add a second income. The resulting growth in two-income households has significantly changed the makeup of the U.S. economy.

A large share of domestic functions are now being purchased in the marketplace in the form of consumer services. Consumer services, however, are labor intensive, and the supply of labor is becoming increasingly scarce and costly for all business enterprises during the 1990s.

To attract and retain affordable, high-quality personnel in a tight labor market, employers will have to tailor their workplace arrangements to meet the social agendas of their employees. Working parents will require different types of support from their employers, such as flex-place, job sharing, and long-term, part-time assignments. By the mid-1990s, labor force demographers forecast that one third of all workers will be contingent or intermittent workers, dividing their lives between employment and family responsibilities.

If an organization wants to retain the loyalty - and the productive value - of lifetime intermittent employees, the incentives and rewards offered to such employees must be commensurate with the incentives and rewards open to nonintermittent careerists, including flexible benefits and compensation, employee and family assistance programs, and career advancement policies. The labor pool realities of the 1990s will also require Americans to pioneer new policies and programs in human resource development.

Wanted: more-sophisticated skills

The realities of decision making, planning, and problem solving in an information-rich environment mean that all U.S. workers need to be equipped with more-sophisticated communication, reasoning, computational, and analytic skills than have ever been required or envisioned.

The impending shortfall in the supply of qualified recruits will require all large-scale employers to high-skill labor to invent new ways to think about and work with their employees. U.S. employers must begin to take aggressive, innovative actions now to assure themselves an adequate supply of quality, skilled labor.

One strategy would be the establishment of internal labor markets based upon the recruitment and development of high-potential, non-degreed personnel through a rigorous program of experience-based learning. Studies and reports indicate that an experimental process built into work assignments and job descriptions greatly increases the efficiency of employee education. Simultaneously, the U.S. Department of Labor's national Commission on the Skills of the American Work Force has concluded that the most effective means of significantly improving the general performance of U.S. public education would be to incorporate apprenticeships into the last two years of high school.

On Oct 1, 1991, congressional leadership introduced bi-partisan legislation that would mandate worker retraining throughout the workplace by requiring employers of 20 or more persons to pay into a "high-skill fund" unless they provide a specified minimum amount of training to their work force.

This measure, which currently seems assured of eventual passage, would be America's first substantial national commitment to the transformation of our economy. If enacted, it will produce powerful changes in the U.S. work place. And, it will offer associations an enormous opportunity for expanding their roles and their contributions to America's economic performance.

Precision performance

Declining domestic prosperity and rising foreign competition will inevitably result in a growing need to substantially improve the cost-effectiveness of all of our institutions.

To realize the productivity-enhancing capacities of new information technologies, we must redesign organizations so that they can put newly available information to work to improve their decisions.

Enterprises that can anticipate customer needs and design and supply products and services to meet those needs based upon the optimal mix of available resources, media, and methods will have the competitive advantage in the marketplace. The ultimate goal will be precision production: custom-tailored, high-quality goods and services at mass-produced prices.

The underlying principle of precision performance is that more and better information can be efficiently brought to bear on each decision made at every level of organizations, thereby ensuring that the most productive or beneficial choice is made at each step of a process.

A similar concept is now beginning to shape our vision of public education in the 21st century. As long as America's employers only needed one fourth to one half of the work force to possess a mastery of formal reasoning and problem-solving skills, public education could rely on a single, homogeneous teaching process from which only one fourth of students could learn effectively.

Today 75 percent of all jobs require some form of formal information-handling capabilities. By the year 2000, work force analysts forecast that up to 98 percent of all U.S. jobs will require such skills.

These current techno-economic realities are pressuring public schools to effectively equip all students with higher-order communication and computation skills. To do this, schools must employ a variety of teaching methods, and they must be able to match the right method with the right student on a consistent, ongoing basis.

Known as precision teaching, this concept of teaching employs frequent testing not only to measure student progress but to identify strengths, weaknesses, and learning patterns. It has never been adopted on a large scale because it is labor intensive and costly to implement. The current capacities of applied computer technology, however, now make the widespread adaptation of precision teaching a real possibility by the year 2000.

Virtually all substantive decisions, processes, commitments, policies, and practices in any field of expertise can be significantly improved through the input of additional, relevant, timely information. This is the essence and promise of precision performance in the information age.

David Pearce Snyder is lifestyles editor of The Futurist magazine (World Future Society, Bethesda, Maryland), and Gregg Edwards is director of the Academy for Advanced and Strategic Studies, Washington, D.C. Snyder and Edwards are co-authors of Future Forces, a study funded by the ASAE Foundation and published by ASAE. This article is excerpted from American in the 1990s, an unpublished monograph presented at ASAE's 71st Annual Meeting & Exposition, August 1991, Washington, D.C.
COPYRIGHT 1992 American Society of Association Executives
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Title Annotation:US economic conditions
Author:Edwards, Gregg
Publication:Association Management
Date:Jan 1, 1992
Previous Article:Vision 2000.
Next Article:Seeing the big picture.

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