Corporate U.S. in Decline– Number of Corporations is Shrinking– Hits Lowest Level in 40 Years: Creative Destruction, or Crisis…

Corporate U.S. is shrinking– at least by one important measure: In five of six quarters to June 2016, across the S&P 500, share buy-backs and dividends exceeded retained earnings… From around 60% in 2009, the ratio of payouts and buy-backs to earnings grew inexorably, passing 100% at the beginning of 2015 and reaching a staggering 131% in the first quarter of 2016… According to Sir. Martin Sorrell; if you imagine the S&P 500 as one company, then that company ceased to grow at the start of 2015 and shrank by nearly a third in the first three months of 2016…

And, while the FTSE 100 may not have gone into reverse, a similar trend can be observed. The dividend-payout ratio has climbed from less than 40% in 2011, to over 70% in 2016… Unsurprisingly in this context, corporate investment as a proportion of GDP has continued to decline. Companies are choosing to return funds to shareholders rather than invest into operations… Yet there is no shortage of cash to invest. Companies are estimated to be sitting on more than $7 trillion of net cash worldwide– a form of corporate inertia that will continue into 2017 and beyond…

In the article U.S. Shrinking Corporate Sector by William McBride writes: The U.S. now struggles with corporate tax inversions, but this is only one of many ominous signs of a long-term decline in the U.S. corporate sector… According to a Tax Foundation Report; U.S. loses about 60,000 corporations per year and about 1 million corporations since the Tax Reform Act of 1986. IRS data shows that there were 1.6 million C-corporations in 2011. This is lowest number of traditional corporations since 1974 and 1 million fewer than there were at the peak in 1986…

In other words, in every year since 1986, roughly 40,000 U.S. corporations have disappeared from the tax rolls. And the losses have accelerated since 2006 to a rate of about 60,000 per year… Many have gone to the pass-through business sector, where profits are passed through to owners and taxed at individual tax rates that are often lower than the corporate tax rate and where there is no additional double-taxation for shareholders…

Pass-through business is subject to just one layer of tax– individual income tax; while C-corporations face double taxation due to corporate tax and shareholder taxes on dividends and capital gains… Pass-through business have grown dramatically since 1986, such that more than 90% of U.S. business are now pass-through entities. The Tax Reform Act of 1986 reduced statutory corporate tax rate and reduced the individual tax rate further, but ultimately raised taxes on corporations in other ways…

Additionally, the Act changed S-corporation and partnership rules to make them more attractive… And it appears that the Tax Reform Act of 1986 was the decisive factor that marked the start of the decline of U.S. C-corporations and beginning of an upward trend for pass-through business. S-corporations grew from 800,000 in 1986 to 4.2 million in 2011, and partnerships grew from 1.7 million to 3.3 million…

As a result, more than 60% of U.S. business profits are now taxed under the individual income tax code rather than the corporate tax code. This explains why the U.S. collects a relatively small amount of tax revenue from corporations despite having the developed world’s highest corporate tax rate… Key findings from the Tax Foundation’s Report are:

  • U.S. loses about 60,000 corporations per year and has lost about 1 million corporations since the Tax Reform Act of 1986…
  • Over time, more business have structured themselves as ‘pass-through’ entities. This allows profits to be passed through to owners and taxed at individual tax rates, which are often lower than corporate tax rate and eliminates double taxation…
  • More than 60% of U.S. business profits are now taxed under the individual income tax code rather than the corporate tax code, which explains why the U.S. collects a relatively small amount of tax revenue from corporations despite having the world’s highest corporate tax rate…
  • Outside of taxation, the traditional form of corporations often provides the most efficient business structure for large-scale projects and investments. Excessive corporate taxation and the subsequent decline of the corporate sector artificially limits this important aspect of the economy…
  • U.S. should do what the rest of the developed world has done; reduce corporate tax rate, integrate corporate and shareholder taxes to avoid double taxation, and limit corporate taxation to profits earned domestically…

In the article Risk-Aversion is Shrinking Corporate World by Sir Martin Sorrell writes: The past eight years have been an era of low inflation, low pricing power and low growth, with disruption coming from all directions– from tech startups to activist investors and zero-based budgeteers… At the same time, a great flock of geopolitical grey swans (known unknowns) clouds the horizon, draining confidence, e.g.; global rise of populism, ever-greater mistrust of institutions and corporations, intractable conflicts, i.e., migrant crisis, terrorism... In addition, slowing of major economies, potential fiscal-deficit issues, reversal of policy on quantitative easing, low-interest rates… all prey on the minds of business leaders…

This cocktail of pressures and uncertainty is not conducive to long-term strategic thinking… and the financial world’s obsession with quarterly results doesn’t help, e.g.; survey revealed that nearly 80% of executives admit that they would take actions to improve quarterly earnings at the expense of long-term value creation. Risk-aversion and short-termism is the rule in most corporate boardrooms, and although this attitude is understandable, it’s entirely wrong. Calculated risk-taking, in the form of investment, is the lifeblood of any business that wants to be successful in the long-term…

Indeed, some economists can imagine a future where even the most valuable companies will opt-out of public markets… According to Kathleen Kahle, Rene Stulz; not only is number of public corporations  in decline, there is growing inequality in economic wealth of those that remain, e.g.; in 2015, 35 corporations accounted for 50%  of all assets of public corporations and 30 accounted for 50% of all net income… While in 1975, numbers were 94 accounted for 50% and 109 accounted for 50%…

Another striking change: In 1980, institutional ownership of public corporations averaged 17.7%; today it’s over 50%. Also, average age of public corporations increased from 12.2 years in 1995, to 18.5 years 2016… This reflects an increasing unwillingness of companies to go public, and there are very good reasons, e.g.; capital investment is easily available, and companies feel no need to put up with the extra regulation and scrutiny that come with being publicly listed…

Overall there seems to be a loss in the sense of purpose for being a public company… According to Kahle and Stulz; public corporations appear to lack ambition, proper incentives, opportunities… They are returning capital to investors and hoarding cash rather than raising funds to invest more… Hence, shrinking numbers of public corporation is not just problem for business leaders but also one for world at large…

Contradiction, Paradox, Absurdity in Managing Organizations: Different Ways of Thinking…

Organizations are complex and paradoxical, and leaders must truly understand its contradictions and absurdities, and that may require thinking upside-down… but don’t confuse absurdity with stupidity… A healthy organization requires clarity and transparency to manage absurdities, which means knowing an organization’s predicaments…

An organization’s ‘predicaments’ means knowing its sacred cows… These are the thing, such as; idea, custom, process, product… that are held to be above criticism. There are herds of sacred cows that roam corridors of most organizations… According to Abraham Kaplan; problems can be solved, but predicaments (sacred cows) can only be coped with… Predicaments must be interpreted, not solved… and they must be seen in larger context for actions to be successful… For example, according to Richard Farson:

  • Communication has its limits; many communication problems are actually balance-of-power issues. Hence, it’s probably unwise to introduce completely open communication into a situation in which there is large discrepancy of power. It’s only when balance of power is relatively equal that truly candid communication can and should take place…
  • Praising people does not always motivate them; praise, for some people, may be perceived as threatening. After all praise is an evaluation, and to be evaluated makes people uncomfortable–even if the evaluation is positive… Instead of reassuring people about their worth, some may perceive praise as a way of gaining status over them. Praise establishes a position in judgment…
  • Every management act is a political act; actions that management take reinforces its power. The inability of management to think in political terms tends to make them look at people as if they have personal issues, when many times the issues are result of their place in the organization’s power structure… Most management resist having to think in political terms, but the alternatives are problematic…
  • Planning is an ineffective way to bring about change; organizations change more often as result of invasion from outside or rebellion from inside. Organizations tend to be blind to the internal cries for change… And planning is great– sort of– but the first time you encounter something you didn’t expect… the plan goes out the window. Once you are underway, things never go exactly the way you anticipate… But, planning does force management to think about consequences, and it does provide an ‘anticipatory alert’ to be prepared for the unexpected– Process is important, not the product…
  • Fix situations, not people; situations that occur in an organization, more than people, are what produce difficulties, even though it may look as if people are the issue… Circumstances/situations are the powerful determinant of human behavior…
  • Lost causes are the only ones worth fighting for; the challenge in many organizations is to engage the ‘lost cases’, but this requires management to be ‘best that they can be’… Usually, lost causes cannot be won but many are so crucial for sustainability of an organization that management nevertheless must try… Lesson is to recognize a ‘lost cause’, and work on it anyway…

In the article Management of the Absurd: Paradoxes in Leadership by Richard Farson writes: The ‘Theatre of the Absurd’ is a post–World War II designation for series of plays of absurdist fiction focused largely on the idea of existentialism and expresses what happens when human existence has no meaning or purpose, and all society breaks down… The message is that only by recognizing the mystery and absurdity of life is the dignity of people served…

Enter an organization’s equivalent; ‘Management of the Absurd’, which is a contrarian’s view of organizations, and it asks management to be more comfortable with using paradoxical logic to better understand the organization and its people… Here are a few exercises for the mind:

  • Opposite of a Profound Truth Is Also True: Great achievements are dependent on rational, logical thinking… But just linear thinking is limiting, e.g.; things are only– good or bad, true or false, but not both… Yet when confronting a conflict we often say; ‘well, yes or no’, or ‘it’s a little bit of both’… An organization to be truly healthy, needs some degree of communication distortion and deception (or if you prefer; diplomacy and tact)… Leadership is the management of dilemmas, tolerance for ambiguity, coping with contradictions, understanding value, accepting coexistence of opposites…
  • Nothing Is as Invisible as the Obvious: Many important discoveries, artistic creations, and best management decisions come from taking a fresh look at what people take for granted or cannot see precisely, because they are too obvious and become invisible, e.g.; a spy’s advice; hide in plain sight… The obvious is invisible (forest for the trees) is major factor in why prediction of future trends is particularly challenging– predictions rely on knowledge of current conditions… However current conditions can be largely invisible even to those who spend their lives looking at them…
  • Most Problems That People Have Are Not Problems: A problem is created by a mistake, i.e.; something going wrong and when the cause is found, it’s corrected… Whereas a ‘predicament’ (sacred cow) paradoxically, is more likely to be created by conditions that are highly value… Most ‘important’ issues in an organizations are complicated and inescapable dilemmas/predicaments where there are no good choices… Great leaders understand the difference between predicaments and problems…

In the article Absurd! Exploring Management of the Absurd by Ron Potter writes: Great leaders realize they often choose between– ‘right vs. right’, or ‘right vs. wrong’… But ‘right or wrong’ is not the issue. According to Dan Rockwell; great leaders make decisions not based on what is right or wrong but what is relevant in the context… Most leadership decisions are about– good, better, best; not right or wrong… According to Chris McGoff; often when management cannot seem to reach a decision it’s because they are assuming that there is a ‘right vs. wrong’ or ‘right vs. right’ argument, when in fact it’s neither…

According to  Farson; management is taught that something cannot be — what it is and also its opposite… This suggests that if one perspective is true than the other must be wrong, which may or may not be correct. Management must engage critical issues of contradictions, paradoxes, absurdities, but they also must be sensitive that these matters evoke feelings of fear, uncertainty, doubt… Yet in many organizations these issues persist, and that suggests they are a consequence of more serious matters… hence they cannot just be ‘managed away’…

 

Coexistence of Opposites– Success Requires a Yin-Yang Mindset: Balancing the Power of Opposites…

The key challenge in any organizations is to reconcile opposites… Rather than see the world in black and white, we must recognize value of black, white and everything in between… According to Wayne Eckerson; the way to address challenges is to keep an open mind and remember that the world doesn’t operate in absolutes, but shades of gray, and opposites do attract... According to Jennifer Kahnweiler; the new model of work requires that you collaborate and understand that opposites are wired differently…

All situations exist because many different opposing forces balance each other and the truly interesting part is that opposite forces are actually necessary sides of the same system… The black and white symbol that depicts yin-yang is all about the interaction of two energies that causes things to happen… According to Yogesh Daudkhane; the beauty of yin-yang lies in the balancing act… Hence concentrating too much on either side, results in an imbalance and disintegration of an organization’s objective. Therefore, continuous assessment of state of the organization and formulation of strategies to maintain balance is key to achieve sustainability…

In the article Half Of It: Union of Opposites by Ken Wilber writes: Have you ever wondered why life comes in opposite? Why are all things you value one of a pair of opposite? Why are all decisions between opposite? Why are all desires based on opposite? Notice that all spatial and directional dimensions are opposite: up vs. down, inside vs. outside, high vs. low, long vs. short, big vs. small, here vs. there, top vs. bottom, left vs. right... And notice all things you consider serious and important are one pole of a pair of opposite; good vs. evil, life vs. death, pleasure vs. pain, success vs. failure, strong vs. weak, intelligent vs. stupid… The world is a massive collection of opposites…

The simple fact is that it’s world of conflict and opposites, because it’s a world of boundaries… And every boundary line is also a battle line; the firmer one’s boundaries, and the more entrenched are one’s battles. The more you hold onto pleasure, the more you necessarily fear pain; the more you pursue goodness, the more you am obsessed with evil; the more you seek success, the more you must dread failure…

In order words, human problems are problems of boundaries and the opposites they create… The habitual way of trying to solve these problems is to attempt to eradicate one of the opposites, e.g.; you handle the problem of good vs. evil by trying to eliminate evil… The point is that you always tend to treat the boundary as real, and then manipulate the opposites created by the boundary… You never seem to question the existence of the boundary itself… Because you believe the boundary is real, and staunchly imagine opposites are irreconcilable, separate, forever set apart…

Thus you suppose that life is better by eradicating all negatives and unwanted poles of pairs of opposites… Even the simplest of opposites, such as; buying vs. selling, are viewed as two different and separate events… Yes, it’s true that buying and selling are different, but they are also completely inseparable. Any time you buy something, someone else has, in same action, sold something. In other words, buying and selling are simply two ends of one event, namely, a single business transaction…

Although two ends of the transaction are ‘different’, the single event which they represent is one and the same…  Hence, the solution in the war of opposites requires surrendering of all boundaries, and not the progressive juggling of opposites against each other. The war of opposites is symptom with a boundary that is taken to be real… hence, to cure the symptoms you must go to root of the matter, i.e.; The illusory boundary…

In the article Harnessing Energy of Opposites by guestcontributor writes: To succeed in an increasingly interconnected world, creative leaders must avoid choosing between unacceptable alternatives… Instead, they must use power inherent in the ‘duality of opposites’ to invent different assumptions and create new models geared to an ever-changing world… According to Dr. Barry Johnson; polarity is a situation in which both conflicting points of view are true… 

The ability to shift from exclusive reliance on ‘either/or’ thinking to leveraging ‘both/and’ thinking is a critical competency for success in an increasingly complex and connected world. Great breakthroughs can occur when forward-thinking leaders learn to harness the power of opposites to the advantage of organization…

In the article Resilience and Coexistence of Opposites by Dr. David Goodman writes: Resilience is most powerful when opposites are harmonized in a system. Whenever you have a personal quality; say being ‘stable’ without its opposite, then there is lack of resilience… ‘Stability’ without ‘adaptability’ creates a situation of stubbornness and inflexibility, thus resistance to change…

On the other hand ‘adaptability’ without ‘stability’ yields frazzled, frenzied change without apparent direction… Hence, organizations can display this unintegrated weakness, or they can be resilient and successful… Resilience means robustness, and it implies both stability and openness to innovate…

Organizations that live by the ‘loose-tight’ principle are on the one hand rigidly controlled, yet at the same time they allow (indeed, insist on); autonomy, entrepreneurship and innovation from the rank and file… According to Peters, Waterman; traditions and behaviors that represent– stability, innovation, adaptability… have the essential for resilience…

Prevailing wisdom is that success comes by driving performance but it’s a ‘coexistence of opposites’ that really matters– every negative event carries elements of something positive… For example; every brave person still feels fear– bravery requires recognition that other things are more important than the fear… Or as the old saying goes; the brave may not live forever, but the cautious do not live at all... Focusing on performance accounts for half of success. The other half comes from focusing on what is called– ‘organizational health’; the ability of an organization to align, renew, execute faster than competitors…

Hence a paradox: The more companies focus on performance, the less they are able to win the performance game, and similarly when only focus organizational health, they will fail as well: The key is balance… According to Colin Price; instead of being single-minded leaders must blend the two opposites… they must grapple with the duality of driving performance and boosting organizational health… But that devolves into dealing with sets of opposites, e.g.; ‘change and stability’, ‘control and empowerment’, ‘consistency and variability’… Seeking one without the other results in failure: Success requires a yin-yang mindset…

Challenge for Business– Minimalism Vs. Maximalism: The Great Struggle– Less is More Vs. More is More…

One of greatest joys in life is the feeling of carrying everything you need to survive in your backpack; that is minimalism at its finest… It’s being a step (or more ) removed from the norm of society… In the business world minimalism is a reaction to overkill and pretentiousness of conventional management; it’s moderation and (less) intrusion… The beauty, elegance are the austerity… According to one of the great minimalist minds, Henry David Thoreau; [management] is best which [manages] least… Minimalism is making decisions– more consciously, more deliberately…

Clear away the noise so you can concentrate on creative thinking… However, minimalism can be taken ‘too far’; and ‘too far’ means something different to everyone… it’s about limits and boundaries. According to Leo Babauta; minimalism is a way of eschewing the non-essential in order to focus on what’s truly important; it’s that which gives meaning and purpose, that which gives value and delight… Clear away distractions so as to create something incredible… 

In the article The Power of Minimalist Management by Robert Callan writes: When is ‘good enough’, good enough? How do you know when you’ve reached the point of diminishing returns? And perhaps more importantly, how do you know when you are doing too much? Minimalist management focuses on reducing the number of ‘non-value-add’ managerial activities to zero. For example, if a manager inherits a department where lengthy, frequent, confusing meetings are the norm, then focus on holding fewer but more effective meetings…

Minimalist requires management and employees to engage in activities that really matter. It about thinking long and hard about strategy. It thinking long and hard about talent and management practices. It requires a large amount of reflection, which translates to fewer but truly more powerful activities… Minimalist in business is hard; it requires courage, trust, self-confidence…

In the article Minimalist Road To Success by Annie Mueller writes: A common refrain in minimalist literature is the burden of ‘more’– more stuff, more people, more organization… But sometimes what’s needed is not ‘more’ but ‘less’: Pare down and focus on what matters… The application of this concept to business should be pretty clear to over-worked, overwhelmed managers and employees… You cannot do everything yourself, no matter how great your skills. So you have two options: either leave it undone, or get somebody else to do it…

Much of daily work that is mindlessly done can be undone, most of the time, without any real damage. But it’s when you stay in a rut with head-down, simply mindlessly doing things that becomes the real issue. Take time to eliminate the pointless, the superfluous, the questionable… Then decide what you can hire-out or delegate… and focus your work on activities for most impact on the organization…

In the article Minimalist Economy by Joshua Becker writes: A modern economy is based on ‘consumption’, and that means consumers must spend more and more to grow the economy… But then the dilemma; when consumers spend more (maximalist) to grow the economy, they often go into debt… and when consumers spend less (minimalist), they typically stay out of debt, but then the economy slows…

This economy is built on the premise that people (consumers) must go into debt to sustain it… How long can that last? Can minimalism and a maximalism economy co-exist? Some experts say that an economy based on free-market principles, over time, would adjust and reinvent itself and find new way to grow the economy… Hence, best of all options– growing economy and efficiency of minimalism…

In the article Minimalist Management– Less is More by Ross Smith writes: The hardest part of minimalism is knowing when– enough is enough; whether creating business plan, or designing business website, or initiate customer engagements… The most difficult management task is to know when to just– step back, trust, empower, delegate… According to David Risley; idea here is to simplify the process, trim the fat, make the business lean and flexible... business doesn’t need to be complicated in order to grow; keep things simple, nimble and the business will thrive… According to Thoreau; life is frittered away by detail; simplify, simplify…

Minimalism is philosophy of– doing more with less… and that means radically reducing the amount of stuff that organizations– manage, own, sell… However many experts have a different view and they say; minimalism is a feel-good vibe and as you go deeper, it slowly becomes more dangerous, destructive, particularly for business… And ultimately, they say– minimalism is the squandering of opportunity…

According to Peter Shallard; minimalism makes people complacent, and it actually encourages people to reduce their ambition… Instead of winning at the rat race of business, minimalism would have you drop out completely.  Minimalism encourages short-term thinking, which is destructive over time… It’s toxic because it encourages you to only focus on having what you need– which means rejecting longer-term opportunities that are critical to sustain any organization…

But in reality minimalism is mindset; think of it as pursuit of freedom… According to Neil Patel; growing a business is one of the best paths to minimalism; when you are do more with less, you create freedom that gives– purpose, independence… freedom is ability to organize, apply resources, pursue activities, provide fulfillment… But minimalism isn’t only about ‘less’; it’s also about ‘freedom’ in management…

Although management may seem like an enemy of minimalism with its schedules, calendars, requirements… these are not stuffs of freedom… But there are ways of managing with minimalist mindset… According to Annie Mueller; take time to identify the– superfluous, questionable, pointless… figure out what things in the organization that you– should not be doing, or don’t want to do, or cannot do effectively, or you simply want to get rid of… then decide what can be eliminated or delegated…

Focus on the work that only you can do, that you can do best, and that you can do for the most impact on your organization... Your mind is your greatest asset, and by freeing yourself of unproductive activities you are taking one of the most valuable steps toward minimalism... Minimalism is a journey, not a destination…

Who is Tracking Your Smartphone– Every Move, Every Stroke, Nowhere To Hide: Its Big Brother in the 21st Century…

Big brother is watching you: Right now there’s a good chance that someone or something is tracking your smartphone, tracking your location, keeping tabs on your every move, every search, every call… And that’s just the beginning;  According to Becca Caddy; we all know that smartphones are smart and they can do many things, and that’s because they are packed full of great technology and a whole lot of sensors… Sensors that can watches your smartphones every move…

According to Becca Caddy; it’s important to know that the sensors inside your smartphone are just tools in the hardware, but it’s how and when smartphone manufacturers or app developers tap into these sensors that is important… Knowing what they can do, and when they can do it, with/without your permission is critical for your safety and piece of mind… There’s irony here, i.e.; most people want smartphones to be smaller, smarter, and more capable of doing cool stuff… but then there are unintended consequences– some good, others not so good… 

In the article Tracking Your Smartphone by Steve Bell writes: There are so many organizations keen on getting your personal data that it might be more pertinent to ask who isn’t tracking your smartphone? It’s a long list, e.g.; third-party data agents, app creators, retailers, social networks, organizations, governments, hackers, snoopers… And ironically most people don’t even know it’s happening…

These predators are out there and they are watching you like ‘big brother’. In George Orwell’s infamous dystopian 1984 novel there is line that says; Nothing is your own except for a few cubic centimeters inside your skull… This could aptly sum-up the way we live in today’s smartphone world; while smartphones are powerful tools and very useful for all sorts of things, they are also capable of tracking your every move and scoop-up reams of personal information…

Your smart phone can automatically track movements if you have geo-location switched on. With smartphones now constantly hooked-up to Internet via mobile signal, smartphone owners can be tracked to within feet of their actual location… It might seem intrusive but this sort of thing goes on all the time, probably without you even being aware of it… A study by Wall Street Journal revealed that many smartphone apps are constantly monitoring users and sending all types of data back to apps, and potentially in the hands of some bad characters… One aim of this ‘furtive’ behavior is to track movements, behavior, and sell this ‘personal’ information to the highest bidder…

According to Ben Edelman; mobile apps are of special concern because smartphones tend to get highly personal data about the user, e.g.; where you travel, what you search on the Internet, who you call, who calls you, what games you play… the flow of personal information is endless. Individually, all  this data might seem unimportant but adding-up millions of users, over months and years– it’s portrait of humanity… Never before is so much data being collected about so many people.

In the article Consumers In-store Tracking Your Smartphone by Erin Griffith writes: A whole new category of technology has sprung-up to serve ‘omnichannel’ retailers, that combine online analytics with in-store sales. They do it by tracking consumers smartphones while they are in-store, and then aggravating that data with their online analytics… According to OpinionLab survey; 77% of consumers find in-store tracking unacceptable, 81% said they don’t trust retailers to keep data private and secure…

Prior to smartphones, it wasn’t technologically possible to find out much about consumers in-store behavior until they actually bought items… And even then they had to buy with credit card, offer email address, or loyalty account to be identified. But now with technology, such as; geofencing, WiFi, Bluetooth… and smartphones; businesses are able to track to customers by identifying smartphone signals… The goal is to engage customers as they enter a store (or relatively near a store), and ‘push’ product/service notifications using their smartphones… 

According to Jonathan Levitt; consumer sentiment suggests that retailers need to tread lightly when tracking shopper’s smartphones. There is a ton of suspicion around in-store tracking, but if it’s going to happen consumers must be informed and agree to opt-in with explicit consent… Retailers must also acknowledge the possibility of data breaches, and up-the-game on privacy and security. The good news is that there is an opportunity for brands that are transparent about collecting data with an opt-in approach works for the benefit of both business and consumers… In fact, business should be able to show consumers that these promotion and engagement programs can translate into real value…

According to Mike Feibus; the big question is whether we all should be feeding into surveillance paranoia… and do we have reason to worry about the personal data that’s being collected by growing number of sensors in smartphones... The general consensus by many experts is that there’s little reason to be too concerned, right now… but that assumes you don’t mind people/organizations tracking your every movement trying to sell you stuff, or sell your information to others, based on where you are located…

Current smartphone technology is just the tip of the iceberg… as smartphones get smarter and use more sensors, it’s going to be more challenging to separate data that you don’t mind being stored/shared, from data that you really don’t want getting into wrong hands, e.g.; health data… As more people use smartphones with biometric sensors to monitor health related functions, such as; heartbeat, pulse… there is high risk that this data might be sold/share to bad characters…

So be very vigilant and protect your smartphone, which means: Know how your smartphone is configured. Be careful with all permissions you grant. Disable location tracking when not in use. Turn-off all apps that track in the background. Free apps are not free, assume they will use your information. Close/log-off all apps when not in use. Check the data collection policy on all apps before download…

AI– Boom or Bust– Time To Get Real About Artificial Intelligence (AI): Cutting Through the Hype, Hope, Confusion of AI…

Artificial Intelligence (AI) is hot, and every company worth its stock price is talking about how this magical potion will change everything, much like– ‘the cloud’, ‘big data’, ‘machine learning’… But the term ‘artificial intelligence’ has been hijacked by marketers and media so that its unrecognizable… So, What is AI, really? When asking experts to define the term the only answer they all seem to agree on is that AI is technology that tries to imitate/augment human intelligence…

According to Mitch De Felice; there are many discussions in the blogosphere predicting the doom and gloom of the inevitable rise of artificial intelligence (AI). There are theories on everything from how it will result in massive layoffs to the ultimate downfall of humanity itself… Some prominent names, such as; Stephen Hawking, Bill Gates, Elon Musk, to name a few… have put forth ominous warnings of dangers that AI could have on mankind…

Others so-called experts suggest that AI is the silver bullet that will cure-all ills of the world… According to Babak Hodjat; it’s all just hype and confusion about what AI is, and what is realistically possible in this modern era… According to CB Insights; it’s clear that 9 of 10 investors have very little idea what AI is, so if you are a founder raising money, you should sprinkle AI in your presentation… Pitch decks and headlines today are filed with references to artificial intelligence and machine learning… But what do the terms really mean? Having at least passing knowledge of what you are talking about is a good first step…

In the article Hype Is About ‘AI’, But Real Action Is ‘IA’ by Anupam Rastogi writes: The philosophical war between artificial intelligence (AI) and intelligence augmentation (IA) has been waged for more than half a century, with the focus shifting between the two as each has made important strides… Classically ‘IA’ refers to the effective use of information technology in augmenting human capabilities. Whereas, ‘AI’ is increasingly being used to broadly describe machines that mimic human functions, such as; learning, problem solving… 

On one side, ‘AI’ camp believes the future of computing is autonomous systems that can be taught to imitate and replace human cognitive functions. A recent example is Google’s autonomous car, where the machine completely replaces human intervention and interaction… On other side, the ‘IA’ folks believe that information technology can supplement and support human thinking, analysis, planning… but leave humans at the center of human-computer interaction (HCI).

Consider a car collision avoidance system that can help a driver prevent an accident, but doesn’t actually remove the driver from the picture… While AI will play a larger role, it’s not a panacea. AI-based solutions work best in structured environments where all relevant information can be considered and where the goals of the system are clearly defined, e.g.; ordering a pizza, setting a meeting, playing chess…

In all these cases, while the number of possible outcomes that must be considered may be enormous, the outcome can be predicted with a high degree of confidence… This is exactly the situation where a powerful computer has an advantage over the human mind… On the other hand, ‘AI’ is not well suited to situations where goals and inputs are not well-defined; it’s here where ‘IA’ will continue to play major role. So, the AI vs. IA war isn’t a war after all.  They both have an important roles to play in the future…

In the article Get Real About Artificial Intelligence by Adam Lashinsky writes: Like many hyped subjects before it, artificial intelligence (AI) won’t do all everyone expects it to… And it won’t make money for everyone who slaps the buzzword on latest project… According to Jerry Kaplan; ‘AI’ has become a misnomer, at least in how most people understand it; it’s not so much about machines becoming intelligent and dominating humans… it’s about the continuation of longstanding efforts to automate tasks, dating back to start of industrial revolution, and beyond…

The fact of the matter is that AI already enables many products and services, hence it’s better to start understanding more about how AI works, than to believe the Hollywood-style hype about the futuristic scenarios. According to Mitch DeFelice; AI systems that predicts facts or even plays games is one thing but having ability, e.g.; to understand ‘sarcasm’… well, that is what separates humans from machine…

In the article Benefits & Risks of Artificial Intelligence by Max Tegmark writes: Everything about civilization is a product of intelligence, hence amplifying human intelligence with artificial intelligence has potential of helping civilization flourish like never before– as long as technology is effectively managed… A captivating conversation is taking place about future of artificial intelligence and what it will/should mean for humanity…

There are fascinating controversies where world’s leading experts disagree, such as: AI’s future impact on job market; if/when human-level AI will be developed; whether this will lead to an intelligence explosion; and whether this is something we should welcome or fear… But there are many examples of pseudo-controversies caused by people misunderstanding AI and talking past each other. And many AI researchers roll their eyes when seeing headlines, like: Stephen Hawking warns that rise of robots is disastrous for mankind… 

When it comes to the potential of IA breakthroughs there is in spite of the hype much to be excited about., e.g.; there is vast and growing amount of mostly– unmined, unrefined, unmonetized data available related to critical problems, and IA ability to augment humans in the analysis of data so as to make; more intelligent, bias-free, decisions.

According to Om Malik; emphasis should be on augmentation, which helps humans interact and deal with the increasingly complex digital world… Augmented intelligence offers the possibility of winnowing an increasing number of inputs and options in a way that humans cannot possibly manage without a helping hand…

But the ultimate success or failure of AI and IA depends on whether developed as business solutions not science projects… Successful organizations hinge on market opportunities, productization, solving problems, rather than just implementation and study of interesting algorithms… Just as a great technology is necessary but an insufficient condition to create a successful organization… so is a great technology in absence of a viable business value proposition unlikely to become anything more than a science project…

Invisible Crisis, Cruel Reality– Displacement of Low-to-Middle Skilled Workers by Automation: Are You Dispensable?

Nearly one-half (47%) of all work will be automated by year 2034. Then question is: Which half? It’s an invisible force that goes by many names, e.g.; automation, artificial intelligence, technology, innovation, robots… Whatever name you prefer, it’s killing traditional jobs… Innovation has always resulted in job losses, but usually economies have eventually been able to develop new roles for workers to compensate… But the velocity of change this time around appears to be unprecedented, and the result is a huge amount of uncertainty about where next generation is going to find work…

According to David Autor; it’s a force that is ‘hollowing out’ the low-to-middle skilled workforce… And this is just tip of iceberg. According to Sebastian Thrun; recent developments in– artificial intelligence, machine learning… puts a large share of employment across wide range of occupations at risk… According to Jerry Kaplan; automation is ‘blind to color of your collar’, i.e., blue-collar, white-collar, no collar… According to Martin Ford; most jobs can be broken down into a series of routine tasks, and more of these tasks can be done by machines…

In the article Where Have All the Good Paying Jobs Gone? by Michael Collins writes: We finally have recovered most of the jobs that were lost in the Great Recession. Politicians and public-policy makers are celebrating the fact that unemployment is under 5%… However, the Great Recession primarily wiped out mid-wage jobs, and the strongest growth during the recovery has been in low-wage jobs… 

According to The National Employment Law Project; in 2012, 58% of the recovered jobs were in low-wage occupations, with median hourly wages from $7.69 to $13.83 an hour. Mid-wage occupations, with median hourly wages from to $13.84 an hour to $21.13 per hour, were the big losers– 60% of all jobs lost in the recession. The higher wage jobs from $21.14 to $54.55 per hour, lost 19% in recession but 20% have recovered and are doing well…

But in essence this economy has replaced good jobs with bad ones. According to Bureau of Labor Statistics data shows; there are 7.9 million people still unemployed. And another 2.1 million are long-term unemployed (those jobless for 27 weeks or more), while 1.7 million people are considered marginally attached to labor force, and 6.1 million people are involuntary part–time workers. So is the economy really recovering?

Five percent unemployment sounds great but when you add it up, 17.8 million people need a job or want a better job… This trend of low-wage jobs growing faster than mid-wage jobs is not just bad for middle-class workers, it’s bad for the economy… The big lesson here is that there are no simple answers to complex economic problems. The simple idea that low-interest rates would lead to economic growth was a simple answer that was accepted by many pundits for years, but apparently they were wrong…

The psychologist Paul Ginnetty calls this type of reasoning; ‘the potent narcotic of reassuring simplicity’… Politicians will always take advantage of people’s addiction to simplistic answers for their own benefit by simply telling people what they want to hear. Remember, it’s not only the quantity of jobs needed but also the quality, those that pay  decent wages…

In the article  Is Your Work ‘Routine’? If So, It’s Probably Disappearing by Josh Zumbrun writes: The labor markets and middle-class was built on– ‘routine’ workers who showed-up at factories and offices, took their places on assembly line, or paper-pushing chain, and did the same task over and over and then went home… Research by Henry Siu and Nir Jaimovich show; the world of ‘routine’ work has collapsed: Over the course of the last two recessions and recoveries, a period beginning in 2001, the economy’s job growth has come entirely from ‘non-routine’ work…

Most research classifies work by whether the task is ‘routine or non-routine’, and whether the work is ‘cognitive or manual’, e.g.; the ‘routine manual’ work includes rules-based and physical tasks, such as; factory workers who operate welding, or metal-press machines, or forklifts, or home appliance repairers… Whereas, ‘routine cognitive’ work includes tasks done by clerical secretaries, bookkeepers, filing clerks, bank tellers… 

According to Bureau of Labor Statistics; U-1 (Unemployment-1) is the narrowest definition of unemployment and U-6 is the broadest measure of unemployment. U-6 includes all classes of unemployed even those who are considered marginally attached and/or part-time for varies economic reasons. In other words, those who would like a full-time job but can only find part-time work. Or perhaps those who were working a full-time job and employer cut their hours rather than actually laying-off employees…

Economists consider U-6 the ‘real’ unemployment rate, although U-3 is generally accepted and commonly quoted Unemployment Rate... According to Randall W. Forsyth; if you are not in the labor market, i.e.; looking for work… then you are not officially unemployed… Current U-6  Unemployment Rate for December 2016 is: 9.1% (up from 9.0% in November)… The Gallup equivalent to U-6 (or ‘Under-employment Rate’) is: 13.7% up from 12.7% in October and 13.0% in November…

In the article How Technology Is Destroying Jobs by David Rotman writes: Advances in technology– from improved industrial robotics to automated translation services… are largely behind the sluggish employment growth of the last 10 to 15 years. According to Erik Brynjolfsson; new technologies are increasingly adopted not only in manufacturing, clerical, retail work… but also in professions such as; law, financial services, education, medicine… The fact that robots, automation, technology… can replace people is increasing a reality in the workplace…

But more troubling is that the velocity of change by technology is destroying traditional jobs faster than creating replacements, which is contributing to the stagnation of median income and the growth of inequality. According to  ­Brynjolfsson, McAfee; rapid acceleration of technology, innovation has greatly widened gap between economic winners, losers and income inequalities…

Technologies tend to favor ‘superstars’, e.g.; someone who creates a software to automate tax preparation and then they might earn millions or billions of dollars while eliminating need for thousands of accountants… New technologies are encroaching into human skills in a way that is completely unprecedented, and many middle-class workers are right in the bull’s-eye; and even relatively high-skill workers, e.g.; education, law, medicine… are affected…

Hence, the middle-class is becoming dispensable, and the top and bottom class are clearly getting farther apart… Many economists believed that by improving productivity, the economy will do just fine… Yes, productivity was the single most important economic statistic. But that’s no longer true…

One dirty little secret of economics is that– technology does grow the economy and it does create more wealth… but there is no economic law that says everyone will benefit: In other words, in the race against the machine, technology, automation, robot… some workers will win, while many others will lose…