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JimPinto.com - Connections for Growth & Success™
No. 194 : 25 October 2005
Keeping an eye on technology futures.
Business commentary - no hidden agendas.
New attitudes, no platitudes.
Contents:
Click on any item to jump directly to that item
GE's Jeff Immelt - The Bionic Manager
The September issue of Fortune magazine has a good article
"The Bionic Manager" on Jeff Immelt, CEO of GE. This is
summarized here, and includes some of my own comments.
The Fortune article starts like this:
"If you could build a CEO to specs, you'd engineer someone
with machine-like stamina, with intelligence enough to excel
at the best schools, vision to recognize the most promising
business opportunities, a discerning judge of talent, tough
enough to push aside managers who don't deliver, budgets his
time with iron discipline. Since you could do whatever you want,
you might as well include all of those with a disarming package:
tall (6-foot-4), good-looking, genial, relaxed, approachable."
Jeff Immelt, 49, is that wish-list CEO, the alpha male executive,
just ninth in a line of succession that began with Thomas Edison.
He is trying to solve one of the biggest problems any CEO ever
faced by pulling off one of the largest transformations in decades.
Since Jeff Immelt took over in Sept. 2001, GE stock is down 15%.
Think of this in dollars: If GE stock had simply matched the S&P 500
after Immelt took charge, GE would be worth over $100 billion more.
For perspective, there are less than 25 US companies with a total
market cap of $100 billion.
To get GE's poorly performing stock back on track, Immelt has to make
the giant grow faster. To do that he has to find out which countries
and which industries will grow fastest and biggest during the next
decades. And he has to get 320,000 employees to follow his lead.
Whether he succeeds or fails will determine the future of the
most widely owned company on earth. Millions of people are betting
hundreds of billions of dollars on his success.
There's a big difference contrast between Jeff Immelt and his
predecessor, Jack Welch. Immelt appears to have ice water in his
veins, and is tougher than Welch. Welch himself says, "At times
I might get too emotional. He doesn't."
Fortune 500 CEOs are an extremely hard-working group, but Jeff Immelt
is outstanding in that class - he's been working 100 hours a week for
24 years. He says, "There are 24 hours in a day, and you can use all
of them." Of course, one has to wonder how his wife and family feel
about him never quite being at home. His wife Andrea (who he met
while they were both working at GE Plastics) is mentioned in the
Fortune article, but only in passing.
Immelt is completely recasting GE, changing the business portfolio.
Many of his acquisitions have been small, but always with the
opportunity for future growth. Some buys were quite large; his
biggest acquisition was Amersham, the British health-care company
that he bought (for $9.5 billion) and combined with GE's CT scanners
and MRI machines. His divestitures were in GE's insurance business,
which wasn't producing the required returns on capital.
Immelt is reviving GE's scientific research labs. He thinks that
technology innovation is a key to growth because virtually every
product and service in today's markets is in danger of being
commoditized. Also, innovative products create the best opportunities
for services, where GE's manufacturing businesses excel. So he's
re-casting GE as a tech-company, an image it hasn't had in decades.
Marketing had become a lost function for GE during the 1990s and
Jeff Immelt's growth strategy includes a culture that is more
market-driven and externally focused. GE's marketing drive will
become as strong as its famed finance and human resources operations.
Right now, Jack Welch would be out-of-date for GE. Jeff Immelt
is the right man, at the right time. Will he achieve his objectives?
My guess: Yes, but it will take time. Will GE's stock recover?
Yes, it's a "hold".
Fortune (Sept. 2005) The Bionic Manager
The NEW GE Corporate Culture - The Jeff Immelt Difference
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Schneider acquires Citect for software
After recent recurring discussion on the JimPinto.com Schnieder
weblog about why Schneider has not acquired Wonderware, Intellution,
or one of the industrial software leaders, news broke this week
which indicated that this was right on track.
Sydney, Australia based Citect is being acquired by Schneider.
The expected acquisition, for cash, agreement was announced by both
companies saying, "Citect's global footprint in the SCADA and MES
markets would significantly enhance Schneider's industrial automation
offerings."
Under the proposed transaction all Citect shareholders will receive
a cash payment of $1.50 per share plus a special dividend of $0.05
per share. This equates to about A$80 M (US$60 M), and represents
a 42.2% premium based on the closing market price on 18 Oct. 2005,
a 59.9% premium over the average price for the previous 30 days.
With 2004 revenues of A$61.5 M (US$ 45 M) and A$4.4 M (US$3.3 M)
net profit after tax in 2004, Citect has grown both top and bottom
lines in 2005. The company's website boasts that 85,000 software
licenses have been sold to date. With expected Citect 2005 growth,
the acquisition price:revenue ratio is slightly better than 1:1
- not bad in a flat market, but not spectacular.
The usual sweet-nothings were part of the announcement: There will
be no immediate impact to staff, no downsizing or closing offices,
Citect's employees represent an exceptional pool of talent, etc.
The meeting at which shareholders will approve the sale will be
held in late December 2005.
It's interesting that Citect's new CEO, Rick Webb will stay for
just a month after the acquisition is complete. He was granted
510,000 Citect share rights as a long-term incentive when he
became CEO in April 2005. 340,000 of those rights were due to vest
on Jan. 1, 2007 if Citect achieved its profit targets for the year
ending Dec. 31, 2006. The remaining 170,000 were due to vest in
2007 under similar terms. Schneider has agreed that Webb's rights
will be worth at $1.50 when he leaves Citect. Not bad for less
than a year at the helm.
Citect already has 80% industrial software market-share in Australia,
with strong system integration and professional services capabilities,
which account for over 50% of current revenues. US and European
software growth are clear targets and Schneider expects to make
further investments to integrate Citect's software suite as a core
component of its industrial automation offerings.
P>
The impact on the automation scenario remains to be seen.
My guess - good timing and move for both companies.
Citect - SCADA, HMI and MES Industrial Automation software
Australian Stock Exchange (ASX) - CITECT CORP. Ltd. (CTL)
Citect press release - Schneider Electric offer for Citect
JimPinto.com Schneider weblog
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Robotics - VCs smell growth
Venture capitalists are supposed to be risk-takers. But most
of them are fairly conservative people. When they invest in
technology, it's because they expect good returns in 3-5 years.
After some false starts in automation manufacturing a couple of
decades ago, robotics technology has not been on VC funding lists.
But now, with the announcement of a $115 million IPO by iRobot
(manufacturer of the Roomba home-vacuum robot featured in eNews),
robot technology is starting to attract VC attention.
iRobot is the clear leader in the commercial robots market.
They've shipped more than 1.2 million Roomba robotic vacuum cleaners
at about $150-275 each. And they have a line of high-priced and
effective military robots.
Another robot company, Zoom Systems, recently raised $12 million
in a funding round led by NeoCarta Ventures. The company makes
and operates robotic kiosks located in hotels and airports,
selling snacks, drinks and high-end items such as iPods at
up to $500. They hope to have 10,000 machines in place by 2010.
In health care, robotics startup InTouch Technology recently raised
a new round of $12.1 million. The company develops remote-presence
robots that allow busy doctors to do virtual consultations. With
a growing nursing shortage, InTouch's 5-foot robots help nurses
provide care to several patients at a time. Some hospitals are
now using the robots, usually for routine discharge procedures.
Just recently, Mitsubishi introduced an Internet-linked robot
"Wakamaru", a friendly, 40-inch tall, 60-pound robot with a female
voice. It recognizes as many as 10 people and calls them by name,
approaches and greets family members when they arrive home, gives
telephone messages and offers to read e-mails. Walkamaru costs
about $15,000 and Mitsubishi expects to sell thousands. Several
other robot "companions" are also being introduced to serve as
assistants, able to learn new skills and grow their capacities
with constant human interaction.
After several autonomous robotic vehicles crossed the finish line
in the recent DARPA $ 2 million challenge, robotics technology
showed that it has advanced significantly, and several groups are
now considering investments for military and other applications.
As I've suggested many times in eNews - the robots are coming....
MIT TechReview - Robotic Rollouts
Mitsubishi Walkamaru Robot Companion
Robots: Flexible Automation for a Strong Economy
JimPinto.com - Intelligent robots will be everywhere
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Kurzweil Book: The Singularity is Near
Ray Kurzweil is one of many leading futurists who envision an event
- the "singularity". Here's what he expects:
"Within just a few decades life as we know it will be completely
different. Non-biological intelligence will match the range and
subtlety of human intelligence. It will then speed past it because
of the continuing acceleration of information-based technologies,
with the ability of machines to share their knowledge instantly.
By 2045, we'll get to a point where technical progress will be
so fast that un-enhanced human intelligence won't keep pace."
Ray Kurzweil is a prizewinning author and scientist who received the
National Medal of Technology and has been inducted into the Inventors
Hall of Fame. His books also include "The Age of Intelligent Machines"
and "Fantastic Voyage: Live Long Enough to Live Forever". Both books
are on the JimPinto.com recommended reading list.
Ray's new book, "The Singularity Is Near: When Humans Transcend
Biology" portrays what life will be like after the Singularity -
a human-machine civilization when human experiences shift from
real to virtual reality. Shades of the "Matrix" movies....
Kurzweil's 670-page book was published in late September 2005.
I got an advance copy at the Accelerating Change Conference where
Ray was the keynote speaker). I've been carrying it around since.
There was a lot of Singularity discussion at ACS. Vernor Vinge
(well-known mathematician & computer guru who lives in San Diego)
discussed the possibilities for a "soft singularity", changes that
will take place over a few weeks or months, not years; and the
"hard singularity", a sudden event which may take place over
just a few hours. Scary, but significant.
Ray Kurzweil's book has already become one of the most widely
discussed books of 2005. It has climbed to No.14 on the Amazon.com
best-sellers list, No.5 in non-fiction, No.1 in Science & Technology.
If you're not intrigued enough to buy this tome, at least read
some of the reviews and discussions - web links below.
CNET - Ray Kurzweil deciphers a brave new world
Wall Street Journal - Here it comes
Hey, Maybe the Singularity Really Is Near
Amazon.com: Kurzweil book - The Singularity is Near
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Pinto editorial - Poverty: America's blind-spot
After a decade of improvement in the 1990s, poverty in America is
actually getting worse. For the first time in 50 years, poverty
increased dramatically in 2004 - BEFORE Katrina made it so visible.
The US population is about 300 million, with 37 million living below
the poverty line. That's more than the total population of California.
Think on this: It's like a poor country with more people than all
of Canada living inside America. If America's poor were a separate
country, it would be the 35th largest country in the world.
America's poverty rate is 12.7%, the highest in any developed country
and more than twice as high as most other industrialized nations.
But most Americans don't know much about the poor. It's like a giant
blind-spot. In the big cities, we know about the homeless in the
downtown area, but we usually avoid them. And we don't see the poor
in rural areas.
Before Katrina, poverty had disappeared from public view. TV dislikes
poor people because their appearance is a downer; according to ratings
meters, it causes viewers to switch channels. Powerful politicians
aren't sympathetic because poor "folks" don't vote. Republicans ignore
the poor, and Democrats take them for granted. No one really noticed
that progress in fighting poverty stalled with the economy in 2001.
Who are the poor? With 72% "whites" and 12% blacks (total population)
America has more poor whites than poor blacks or Hispanics. About
8% of American whites are poor, compared with 22% of Hispanics and
25% of African-Americans. This represents an advance for blacks in
recent decades, thanks to the growth of the black middle class. But
it's still a shamefully high number. The jump in white poverty in
nonurban areas accounts for most of the recent poverty increase.
The causes of poverty are still being debated. Liberals blame
an economic system that's tilted to the rich; conservatives blame
the poor for not helping themselves. And no one does much. While
hunger, crime, drugs and overt racial discrimination have eased,
other problems have worsened: wage stagnation, social isolation
and a subtle, insidious form of class-based racism.
The primary economic problem is not unemployment but low wages
for workers of all races. With unions weakened and a minimum-wage
increase not on the agenda, wages have not kept pace with the cost
of living. Since 2001, the US has lost 3 million manufacturing jobs.
For the poor, the idea of low-wage jobs' covering the basic expenses
is a cruel joke.
"My bills are all due and the baby needs shoes and I'm busted
Cotton is down to a quarter a pound, but I'm busted
I got a cow that went dry and a hen that won't lay
A big stack of bills that gets bigger each day
The county's gonna haul my belongings away cause I'm busted."
- Ray Charles song
Things are very different at higher levels, and vastly different at
the top. The rich get richer. Here's a symptom: In 1965, the average
CEO made 24 times as much as the average worker; by 2003, that ratio
jumped to 185 times. Today it is close to 500:1.
What should you and I do about poverty? I'll appreciate your comments
and suggestions.
Newsweek - The Other America
Understanding Poverty in America
Statistics on poverty & food wastage in America
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eFeedback
Bill Morris [billmorris@mailblocks.com] from Arizona is already
using alternative fuel:
"Fuel prices are a sore subject these days, but I don't worry.
I don't use ANY petroleum products in any of my vehicles. Instead,
I use bio-diesel fuel in both my car and truck, and my wife uses it
in her pickup truck. And they all use synthetic oil in the engines.
Our costs are about 80 cents a gallon plus or minus.
"After removing the glycerin (which I use for custom made soaps)
from used cooking oil I can burn it directly in my vehicles. Yes
it's a pain but I make enough to sell some for a profit to support
the equipment necessary to do it.
"I don't try and lower my costs by producing more because I don't
have the time now to do so. But I bet I could sell more than I could
make. The really ironic thing about the whole deal is the lack of
interest within the community to make bio fuel. Long-term results
aren't in yet, but so far so good."
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Ron Davis [ron.davis@synchrony.com] on fuel infrastructure:
"Many of the discussions I hear of alternative fuels seem to ignore
the distribution side of the problem. The world currently has a very
extensive infrastructure for the distribution and sale of gasoline
and diesel fuel.
"Replacing or upgrading this infrastructure to accept some other
fuel will not take place until there is market demand. There will
not be an extensive market for any alternative fuels until there
is an infrastructure to support it.
"New alternative fuels will only be accepted if they can be handled
by existing gasoline/diesel infrastructure and treated like a
different grade of gasoline or there are extensive government
incentives to develop alternative infrastructures and markets."
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Richard P Thompson [thompsonintl@comcast.net] comments on ISA:
"For 3 years I served as the National Chair of the Emerging
Technologies Conference. My greatest claim to fame is that
I was replaced last year by Dick Morley. (smile)
"ISA did most of the work, but the results were more and more
disappointing as time went by. The technical level of papers being
presented were pretty weak' attendance was abysmal. I always felt
that we should be trying to look ahead 5 years, not playing around
with new algorithms and the latest self tuning controller schemes.
The basic problem was that there were never enough papers submitted
to go around. If we were picky, we'd have a couple of good papers
for a 3-day conference.
"Many Universities are doing research into Control Systems, but
they are aligned with IEEE, where their research is more respected.
And there is also a lot of military work at applies, but is not
part of traditional ISA activities. Instead, ISA tends to focus
on the manufacturer-agent-customer loop.
"It just seems that ISA is stuck in a rut. It's traditional base
is collapsing in the way you have well described. Before we head
off to China and India to recruit new blood into ISA, perhaps we
should consider other technology sources here in the US, which
ISA has never fully exploited."
The ISA Expo is being held in Chicago this week. I'm not attending.
If you attend, please send me an email with your comments and feedback
on the event:
email: Jim@JimPinto.com
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