tv Public Affairs Events CSPAN December 29, 2016 12:09pm-2:48pm EST
coming from the world of research collaborative sciencs s so it is great pleasure to do this topic of artificial intelligence at a national level. i think this is the perfect time to conduct this at a national level and i want to thank the council, i want to thank debra and all the council leaders for giving us a chance to present artificial intelligence and what i would like that do is for the panelists that are sitting here, roy and cynthia and daniela, i'd like to mention several facts why this is a tipping point where artificial intelligence is today. the tipping point is you see a lot of people are talking about artificial intelligence as the next internet revolution. it is absolutely the next internet revolution. it's very pervasive. not only that, we're now seeing, according to some of the economists and people from
china, for example, baidu, they're saying this is the next electricity, this is the next energy. why this is all happening? the level of investments in artificial intelligence has been really very high and we're now seeing a huge potential of all of the a.i. hardware and software reaching approximately $47 billion by 2020. that's a huge step up. we see enormous, enormous opportunities in the area of startups, especially in silicon valley, but in many ecosystems as the panelists could vouch around the world and so far there are over 1500 startups across the world that are leveraging artificial intelligence. that's not a small number. you look at the information. for example, ibm watson, back in 2011, was simply focused on basic machine learning, not deep
learning, now they have 30 components focusing on deep learning today. google had only fuel deep learning initiatives several years ago but today they have more than a thousand components in this space. we're seeing business models being changed, totally transforming the industry, totally transforming the world of academia and research and this is now entering a stage where i just came back from g20 in germany and it is a high topic on digitalization task force focusing on artificial intelligen intelligence. digitalization alone is providing major impetus, major force for growth around the world. additional 20% of growth in artificial intelligence will probably lead to 1% growth worldwide. that's why it's critically important and that's why we're having this discussion so with
what i'm mentioning regarding all this information, regarding the internet of things right now they're basically saying it creates a value of over $1.9 trillion by 2020, 2023. the numbers are enormous. we were just a few years ago from a venture capital perspective playing with only maybe $200 million, $300 million invested in artificial intelligence but now, today, we're going to close the year with probably close to a billion dollar invested in the space. we have with us the managing director of bloomberg beta but you have other groups, intel capital and others who are heavily, heavily investing and in the next several years we anticipate investments will be at about $5 billion in artificial intelligence. so with everything going on, we're in the cusp of a major, major revolution. the models will shift.
let me be a maverick today. i think companies -- some companies might simply not exist or be transformed because of what we're seeing so i will pose a question first to you, daniela. what do you see in terms of the perceptions but and are we reaching the point right now where our economic models are going to shift and change and what do you think the future will bring to the united statth? >> it's a great question. thank you for the question. i would say this is an extraordinarily exciting time for a.i. because a lot of the tools that we as a community are developing are maturing and this is due to great advancements on the hardware side. we've heard about moore's law today but similar expotentials are happening in other aspects,
in the quality of sensors, many the quality of the motors that we have available to us, in how we communicate. practically everything about the digital space is subjected to moore's law, to an exponential. in addition to that, as a community, we have made tremendous progress in how we solve problems and the third reason is the advent of data. we have now have the ability of collecting enormous amounts of data that help us learn how to do things right. when we cannot write from scratch algorithms that will solve those problems. so good hardware, excellent algorithmic support, tremendous amount of data are all coming together. there is a confluence that enables all these things to come together to deliver things that -- to deliver capabilities we never even imagined, even five years ago. so five years ago nobody was talking about self-driving cars. and today it's inevitable that
we will have self-driving cars, all major car manufacturers have announced self-driving car efforts and we really expect that this technology will come to bear and will bring us safety and will bring us more efficiency and lower impact on the environment. these are all tremendously exciting possibilities for the future. >> thank you very much. cynthia, just to follow up on that question, what are you seeing? you heard all the facts, we're hearing tremendous potential, tremendous growth from the investment to revenue potential in artificial intelligence, what are you seeing in the area of robotics in artificial intelligence and specifically i know that you're also involved and you founded a robotics company as well. give us an impression of how do you think it's going to change the business models and impact the united states for tomorrow?
>> i would definitely say we're at an inflection point of a.i. and it's not just about the technologies that daniela talked about advancing to the point where you can commercialize these systems. but when i first started work in this field, it was the case where you had these large corporations that would develop these advanced technologies like speech recognition, machine vision, you name it, it would take millions of dollars to develop these technologies and they would hold them close to the chest hand, you know, productize their own products based on these core technologies. and what's been happening more recently on artificial intelligence is those tools and abilities have been opened up into stks so third party developers can take these techniques and put them into their own products and services so it's ee's recome by tonight information that's developing right now. now we talk about google and
microsoft cognitive services and watson, all the companies are starting to do that. the way that impacts a company like mine, my company is called jibo, back in the day when you used to try to commercialize a robot you would have to build all the intelligence into the machine itself and it couldn't really change unless it was from its own learning. but now that it's connected to the cloud you have this ability to continue to upgrade the content, the capabilities, to learn from data, to continue to have -- adapt new abilities over time, to add new abilities and now as platforms you're able to have much like the iphone a whole developer community of people now able to create applications for robots where they might not necessarily be a person skilled in robotics itself, but through the tools and technologies are able to create compelling applications for a new kind of platform so it's absolutely transforming how robotic products are starting to be able to be commercialized and creating new revenue models. this idea of iphone platform
model is new to consumer robotics but you're seeing companies adapt that. >> i know my own daughter is very much attached to alexa, the new product that came out of amazon and many of you have seen that bezos and his team at amazon has released -- speaking about the relative democratization of the tools in the space of artificial intelligence, they just released a bunch of tools so many developers and many end users and many research facilities and executives would be able to guide their teams to develop a.i. applications. amazon has done this. intel has done this on the hardware side alone. ibm is working as well. so right now they're structures, even though we don't the major models or standards in place, there's a whole series of democratization which is taking place right now and it is very obvious of some of the major players. roy, thank you so much for joining and bringing the venture capital perspective.
you're one of the leading players investing in artificial intelligence. over several years we have seen major players from facebook to google to microsoft to ibm really buying out ideas, buying out startups. people who are visionaries, people who are leaders in this space. there has been over 150 acquisitions, 40 just alone this year by the corporate venture community, especially of the companies that i mentioned. where do you see this going? what's the end game and where do you see the convergence of venture capital and artificial intelligence? >> well, so, we invest on behalf of bloomberg, collusively in companies that influence the future of work and when we started our fund we did not mention or think about artificial intelligence. this was three and a half years ago. and six months into starting the fund one of my partners came to me and she said "we should start looking at this artificial intelligence thing." and at first i dismissed her and
said fine, you want to work on it, be my guest but it's your time. and three or four months after that she came back and found 2,000 startups that had been working on various -- we prefer the term machine intelligence because it conjures up less of the science fiction nightmare and, of course, cynthia and daniela are actually inventing. as an investor, my job is just to help them plug the invention into the power at the end of the day and commercialize it so we play a role that's relatively late in the process which is to say governments, large corporations, academic institutions start the chain of invention and we're just delivering the the last mile. so for venture capitalists to be excited, it means it is almost ready. now, that said, i still think it's early. we are at an inflection point and the way i think about it is the conversations we're having now about machine intelligence are similar to the conversations about the internet in 1997. if you remember that moment when everybody started saying, well, what's your internet strategy? what will you do? and they hired people with
strange titles like "web master." that's the moment we're at right now in artificial intelligence. the tools are beginning to democratize, we know there will be a lot of value. the acquisition so far have honestly been a blip, i think, relative to what will happen and we look at it -- you know, at first we said well maybe this trend of machine intelligence, of machines making judgments and taking actions that affect the real world as otherwise people might only be able to do, maybe it's as big a trend as mobile. we said no, it seems as big as that. maybe it's as big a trend as the internet. and actually i think it might be as big a trend of all of software to date. if you look at productivity numbers, the last 25 years, it's unclear whether technology has had that big an effect on u.s. productivity and i think that's because we've been waiting for the promise of the kinds of inventions we'll see now through artificial intelligence. >> roy, just to follow up again to the earlier statement that i made when i was in berlin. the chinese were saying that
they are creating thematic funds, which are specifically related to artificial intelligence, one is baidu alone has put together over $200 million fund. this is happening right across china. investments are very, very important. for us to make sure our startup community and make sure that we are inventing and we are reinventing our future and keeping our leadership position which i think we should in the united states, what do we do? >> i think venture capital is a rounding error, despite doing this for a living. much more important is government investment and large corporate investment in riskier longer term fundamental basic research. i mean, we receive the end of the pipeline and it's funny, we've now done this study, two of my partners, for three years, mapping the artificial intelligence companies. the first year we got a bunch of calls from academics who said "i've been working on this, thank you for seeing it" and the second year we got a call from investors who said "last year i saw what you did and now i want to put money into this thing." this year for the first time the
wave of calls is from the "fortune" 500 so we now have big multinational corporations and not the ones who had the technology skills to invent as ibm did, as google does, as facebook does, but everyone company saying wait a minute, i need to do something about it. so if you are part of the leadership team of a large established corporation, you ought to be asking what is our artificial intelligence strategy. now, note, just like the late '90s with the internet, the single biggest danger from. ai. for corporate america right now is many companies will blow billions of dollars on foolish a.i. investments before wing by the your out what to do. i think we have 25 years ahead of us with incredible dividends for the economy and human beings. >> i agree. we need a very cohesive and solid ecosystem. you can't have venture capital sticking out. you need corporations and you need well-funded research, especially at the government level to make sure that we maintain our very competitive position. as you know, the u.s. is
competitive in this space, the next follow-up countries are in the nordic area and sweden and israel and other places. >> i don't know how competitive u.s. is. for what it's worth, i think this is an area where canada was focused on this issue for decades while the u.s. was basically asleep at the switch. china seems much more focused on this issue. i think one of the issues that we have and where a group like this can be helpful is as an industry right now we lack strong hypotheses about where employment growth might come from. we have lots of hypotheses about economic growth, but this is a warning call to the u.s. which is not the leader on this issue right now. >> i would just like to jump in to add and say that i was in china in shenzhen in august at a meeting where the governor of the province announced $500 million in robotics research at local universities for the province alone. this is for the guangdong province. and let's consider our
investment, our national robotics initiative is amazing. it's wonderful. it's at $30 million a year for the whole community. our whole country. >> the amount that the u.s. government spends annually on a.i. research, funding a.i. basic research, the president released a report. a.i. should be important. and the number was a billion dollars. it is nothing. i mean, we probably need at least 10 times that. >> i agree. and it should be a public/private partnership. we need government, families, all of the institutions, just coming back to you, regarding your home country, for example, romania and other places, you see when i had trouble in the region, i was just in slovenia alone, they have invested heavily in a lot of the artificial intelligence research and people but it's not reaching the markets. how do we bring that talent that right now everybody is looking for talent of specific a.i. talent in data modeling, statistics. how do we bring this talent into
the united states to develop market-ready solutions and products? >> so that's a great question. i would say that we have a lot of talent at the top universities in the united states but it's not easy for our students to graduate to remain in our country and give back after their training because they don't get a visa. it's difficult. it's difficult to for them to get a work visa. so we need programs that enable our students to continue to stay here. at the moment many of the communities return to their home countries and help build the local economies there so we have to do something about that. >> thank you. cynthia we are at a point where industries are being created there, first movers, we've mean? the technology world what microsoft, what google, what facebook is doing. can you share with us your
experiences especially in the area of robots but also the consumer space which companies are the first movers and what business models are they transforming as well as also in enterprises. what are you seeing? what is -- what is research doing to align and connect with some of those first movers? >> so before i answer that, i want to also just raise the opportunity of artificial intelligence in education. so many of these questions around talent and opportunity, again, we hear this theme quite a lot this morning. artificial intelligence offers a whole new innovative approach to bring potentially high-quality education for everyone through mobile devices which are prolific. we shouldn't only be thinkings about k-12 and beyond. we should start tapping the problem at early childhood which is too much science showing that that critical neural foundation that's being formed, that even if you start kindergarten behind, it's very hard to catch up. artificial intelligence and these technologies offers an opportunity to bring these experiences to the home so you
can learn that home and not just as school to augment what teachers do. i see this as another area of critical innovation that we take seriously as a country. in terms of the leaders in the area of robotics, i have to say, clearly there are a lot of real will i profound movers in the space depending on the area of robotics, agricultural, medical, transportation, cars and so forth but i have to say the united states in terms of these first kind of bold companies still is producing a lot of the most innovative products and innovative model. even in my own sector of personal robots coming into the home, we did a crowd funding campaign because to raise venture capital at that stage, you had to put your idea out there and there have been so many copycats around the world now trying to do what we're doing because the idea is out there. so often the innovation is being started in the united states and what i would like to see is the ability for us to continue to
lead and own that rather than them being taken over because there's so much more investment happening in other parts of the world. >> cynthia, thank you. just because we're short on time and i have a lot of questions, this is an interesting topic, i'm sure our audience as well, there's been a lot of talk regarding autonomous enterprises and what makes enterprise autonomous, some people talk about self-service intelligence agency, neural networks, maybe roy you could talk about some of the examples and what you're seeing in the autonomous enterprise someplace. >> sure. i'd like to fund a company that runs itself. sounds like a good thing. or a d.c. that runs itself would be a good thing. so we invest in things that are very mature. i'll give you examples of the things but they tend to be where there's a large data set, an immediate business value and an immediate write a to deliver value to a customer. i'll give you a tangible example. we invest in a company called textio that takes a job description and before you publish that description to get candle dates it analyzes data
about past job descriptions to predict the quantity, quality and gender mix of applicants and lets you edit your job description before you put it out there to maximize potential results in the world. the reality is, they're using relatively straightforward well understood machine learning techniques. we invest in a company called orbital insight that scans widely available slate data and uses machine vision to estimate the size of markets so they can approximate how quickly is the chinese construction market going by counting the shadows on buildings. and so we have a lot of these data driven finance and health care are right because of the size of the data set. the question this all raises is what happens to the experience of work and jobs together with new america bloomberg has been driving a project called the shift commission to study long-term scenarios for work in the united states and i think the potential range of outcomes we might have -- i mean, it's easy to picture the self-driving truck, uber just bought a company that does this, that
made its first beer delivery, we did focus groups in ohio with truck drivers having them watch that delivery, some fascinating results but the self-lending mortgage officer, the self-auditing accountant. [ laughter ] there is a variant of this in any industry and as we all know, the total number of jobs to me is not really the issue because a balloon doesn't pop because of pressure overall it pops because of a pin. and we have many, many different professions across the united states where there's some risk of profound change and so whatever industry you're in i think there is some a.i. application that is coming for you very quickly. >> roy, just because we're running low on time and i want to get into this area of the darker side of artificial intelligence. i'm an optimist and i believe that artificial intelligence will create lots of jobs in cyber security. we're stepping up on value creation in the united states. we're always looking to solve problems so if we are looking to solve problems and we're stepping up in value creations
we need to have people who are going to be architects. we need to have people who are statisticians. but i understand gartner and forester put out a statement that there is going to be 7% to 14% job loss in 2025 in a lot of areas. and roy you have done studies with truck drivers and taxis. >> we've looked at the research and when we debate these things we have a point prediction about here's what i think will happen and what we should do. the reality is human beings are terrible at prediction so the right wail to think about it, we believe, and the reason we're doing scenario planning for the future of work is to prepare for a wide outcome of scenarios. >> roy, i apologize. because of the shortness of time and i want to jump to daniela for comments regarding the job loss opportunities in the space. >> i see a.i. as a vector for tremendous positivity. i see a.i. improving the quality
of jobs. consider any job. its repetitive and predictable aspect can be done by a machine. that's not just for truck drivers and other jobs that are really obviously in the line of machines so i really see a huge opportunity to bring safety, to bring customization and to bring more efficiency and joy because if you have a machine who does all the routine parts of the job that you might not be excited about you could have more time to focus on what you're interested in. >> thank you very much. and cynthia, just as we're coming to the closure of the session, there has been a lot of talk privately and also through the media discussing the ethics issue of artificial intelligence. they're trying to scare us, in fact, to say the a.i. world could be catastrophic to mankind because they'll become smarter, machines will become smarter than human beings.
you heard that discussion and that discussion was -- i had several friends from google and other companies that took that further saying that in 20, 30 years ray kurtzwell said we'll attach our brains and we will scan all this information almost like what we're doing with the phones so they're predicting this scary future. but i'm not sure this is the future because we're talking about applied a.i. not creating a conscious machine and i want to get your feedback and perspective on the ethics issue on where we're going with a. i. >> i think the primary ethics issue is making sure the a.i. we create benefits everyone not just the view and i think right now if you look at the applications they tend to be clustered around certain kind of sectors and it's not being democratized so one of the big reasons i keep coming back to education, for me that's one of those areas where a.i. can truly benefit everyone on the planet. i think when we talk about the
singularity, it's all speculation. what we know right now is we can within a very specialized domain we can create an a.i. that can be -- perform better than a person. but people can do many, many, many things. these a.i.s that do one thing, that's all they do do. so the new dialogue that's happening in research and the commercial sector is the collaborative aspects. it's a.i. that works in conjunction and partnership with people so that the human a.i. team is more productive, more successful than either a.i. alone or human alone. so i don't see doom and gloom. i see us being augmented and able to lead successful and fulfilling lives. we have to get that partnership right and that's when you get back to the basic research and the application of that research. >> and government support for economic security of individuals. 100 technologists and academics released one of these projects to call for exploration of the
idea of a universal based income, every individual getting paid in order -- simply as a citizen because we think we need some complement to the uneven effects of a.i. on potential employment. >> and finally one quick brief answer from each of you. how does a.i. impact globalization. there has been a lot of discussion about outsourcing but we're at a stage where we're leaving automation and going to complete autonomy. how does it impact developing countries? how does the further growth of our economy -- what is your take starting from you, daniela? >> i like the idea of customization. i like to think about how we do manufacturing today where someone designs all of our products and they are manufactured overseas mostly so now imagine that we replace that process with a customized process where we have customized templates for various products people could customize with
their personal preferences in their own home that gets produced in a local factory nearby and this could impact the u.s. and every other country on the planet. >> thank you very much. cynthia. >> for me in terms of globalization, i think in terms of the empowerment of teams but the individual. so a.i. authors the opportunity for deep personalization and empowerment. so services that we have to go for increasing going to be able to come at a personal level to the homes whether it's finance planning, education, health care. we'll see the empowerment of the individual in a whole new way. that will be a global trend in general. >> roy, your final word. >> sorry to end on this but i'm not sure i have anything use to feel add. i only consider myself an expert in the u.s. >> america first. america first. >> what do you mean by that? >> america first where inventing -- less on globalization aspects and trade? >> the first mover thing is wildly overrated. we need when these things work
for them to benefit the united states but i don't care who's first. >> i think this is an exciting panel and i believe this is our future. we as american entrepreneurs, american businesses. american research, american academia should be invest iing more. we've seen today perspectives coming from the top academics in research and financial capital. thank you very much for listening and being part of the future. the next time we meet we will -- i think we may have intelligent agents that will guide us to this meeting, to lunch, will schedule things for us it wouldn't be a cool future for us and i hope it happens very soon. thank you everybody. [ applause [ applause ] next, in a series of short presentations, leaders from industry and national labs will
showcase exciting and game changing innovations. ladies and gentlemen, please welcome the director of pacific northwest national laboratory dr. steve ashby. [ applause ] >> good afternoon, congratulations on your 30th anniversary. if we could clear that so we don't have a tripping hazard, bring up the first slide, please. we talked earlier about the grid, about machine intelligence and about bringing those together. i would like to talk about energy. it illuminates our night sky, warns our homes and powers our economy and -- thank you. the united states we use an a tremendous amount of energy. in fact, about 97 quads of energy each and every year. now 2 department of energy's
national laboratories, we're working hard in partnership with academia and industry to make sure we continue to develop the technologies that will ensure that we have the clean affordable and reliable energy that we'll need not only today but into the future. but another part of what we're doing is looking at how we can make greater use and better efficient use of the energy we already produce. that's important because when we look at that 97 quads, we waste about two-thirds of it in terms of waste heat and other inefficiencies. let's put that in perspective. what would this wasted energy do for us? well, it would actually power the rest of our hemisphere for an entire year. alternatively it would power the entire middle east and africa. that's a lot of energy we're wasting. if we can find better ways to be efficient we can save that energy, save money and
capital outlays for new power plants. so i want to talk about what we're doing in pacific northwest national laboratories to increase energy efficiency. let's see if we can get it up here. there we go. in particular i'd like to focus on on our electricity usage. we use electricity for a variety of things and here you're seeing a montage of things relating from lighting, hvac, a whole variety of things that use the majority of the energy we use out of that 97 quads. and we have made tremendous progress in improving the efficiency of these individual devices and the pieces of equipment we use, when they're running. the next challenge is can we infuse them with intelligence we just heard about, some things we're here doing so that not
only more efficient when they run but they know when to run and they communicate with the smart grid to avoid peak low times and that's what we're doing at the laboratory. and the invention we're coming up with here, very simple, but something we're calling voltron. a device smaller than a deck of cards and it's an innovation we've come up with combining some of the technologies we already have today for controlling appliances and technologies being able to do that from builting to campus to regional scale and infusing it with intelligence. so what is this device? it's a combination of the algorithms we just heard about, the real smarts, running on a very lightweight computing platform such as raspberry pie and made available through open source through so our partners can download it from the
volttron.org web site and use it for a variety of applications. we're eager to partner with people to explore the ways volttron can be used and we run an annual competition in partnership with d.o.e. to do this. we're partnering with people to adopt this technology. what can do it for us? hopefully it can move the slide forward. what we have here is we can use that technology within your building to control appliances or devices. here we're just showing an hvac unit and refrigerator display case you might see in your supermarket and you can control that device, a series of devices within a building, the entire building itself so you have a smart building connected to the smart grid, entire campus or region. more than just that, you can also have it talk to the grid in a two way fashion through something we call transactive control which enables concept
called transactive energy which really does make the power of the smart grid a reality. is so this device helps us do that. what are the successes we've had? let's look at that first example here. what you can see is that in the case of the refrigerated display case our colleagues at oak ridge national laboratory in partnership with emerson ran an experiment and they show if you use this you could save a tremendous amount of energy. so think about those refrigerated display cases they have a defrost cycle. presently that defrost cycle just runs every so often. when it ones it's very efficient but it also runs a lot when it doesn't need to. suppose you had environmental sensors that brought in the di a stream to volttron that told you when you needed to defrost it so you didn't need to run the cycle when you didn't need to. that's what volttron allows you to do. it can control that. 75% reduction in energy usage.
if you do it throughout the united states that would save enough power for 200,000 homes. another example we did at the pacific national laboratory, with a small company, transformative wave in western washington, is looked at retrofitting volttron into an existing buildings control line they have and using it for roof top hvac. they demonstrated up to 50% energy savings on that device. not buying a bunch of new hvac equipment, a retrofit of that technology into a product they're already offering. this is the promise of this technology where you're infusing what we already have in terms of energy technology and i.t. to make these things smart now that's what you're doing for example just to control a single device or a piece of equipment. you can do that throughout the entire building and make the building smart or you can look
at what you can do in terms of a campus and that's what we're doing at pacific northwest national laboratory. here we installed volttron in nine different builds with a number of devices connected to it and we managed this and look at the whole campus now in what we're doing to control our energy usage, optimize it and make the laboratory itself a test bed for demonstrating the power of transactive control. here's an example of the control room we use where we can monitor the energy and water usage at the laboratory as part of our efforts for sustainable operations. we look at this we have going on here, that's what we're doing at the laboratory. in addition to that -- whoops, we also have partnerships going on with the university of washington and washington state university. they're using volttron in different ways. the university of washington is
looking at using it for the incorporation of solar technologies into their campus is. washington state in terms of the corporation of large scale stationary storage as we heard about earlier. and they're each doing an independent study. what we're now getting funding from, the washington state clean energy fund, is to bring that together into a single regional demonstration of the power of transactive energy where we can collaboratively manage our loads in realtime and respond to signal s we're getting from the grid. we're doing that in the northwest. we've now been partnering with colleagues in ohio, the university of toledo and case western university where they're also looking at this with respect to the incorporation of renewables and stationary storage and they're doing their own demonstration and our plan in the future is to link that to demonstrate the power of transactive control at a larger scale. and right here in washington, dc, we've already deployed volttron technologies to eight schools and buildings with plans to go up to over 150 within the
next year. so here what you're seeing is taking a very simple idea, a lot of smarts in terms of the algorithms, infusing that and bringing it together and working with people to understand the different applications we can have from this technology and making it available to our partners so they can integrate it into their existing product lines and new product lines. we've already demonstrated the ability to save a huge amount of electricity, reduce much of that two-thirds wasted energy and save consumers and building owners a lot of money in the process. so we'd like to invite to join us looking for different ways in which we can exploit the volttron platform, how you can develop those applications for it, make use of it or if you're a company the product line talk to us about how you can incorporate volttron into those product lines so we can have a bigger impact. we can bring together the environmental sensing we have in the future around homes and
buildings to save money, save energy and make the future a better place. so thank you very much. [ applause ] ladies and gentlemen, please welcome dr. sajid chund, senior vice president advanced technology, and chief technology officer rockwell automation. >> good afternoon. let me also start out by congratulating the council on 30 great years, really appreciate the opportunity to speak here this afternoon. in my ten minutes, what i'm going to highlight are some of the exciting opportunities in manufacturing. we heard that manufacturing is also at an inflection point for realizing unprecedented productivity from a lot of the technology advances that are occurring around us. if you look at all of the different technology advances -- if i could only advance the slide -- so when you look at all
the different technology advances that are impacting us. everything from ubiquitous connectivity to machine learning, analytics, we heard a lot about some of these technologies just a few minutes ago regarding ago regarding artl intelligence, mesh learning. well, the excitement in the manufacturing area is around industrial internet of things. you've seen projections that by 2020, there will be 50 billion devices connected to the internet. out of these 50 billion devices, roughly half will be in the industrial space. companies like cisco and mckenzie have put out numbers for the new value that this connectivity is going to generate. and that number is around $15 trillion, just a smidgeon less than our national debt. so off these $15 trillion of new value 27% is expected to be in manufacturing. that's the largest segment of
the benefiting industry from industrial internet of things. so that's pretty exciting. if there really is roughly $4.5 trillion of value to be created from industrial internet of things, how do we go about it? what are some of the impediments? so i'm going to talk a little bit about the not just the opportunities but what are the areas where more innovation is needed, where mortal entis needed, and better policies are needed to move forward. so let's advance to the next slide. the vision that manufacturing is moving towards, we call it the connected enterprise. basically, what the connected enterprise means is bringing together data from your production sites, your manufacturing sites together with data from your supply chain, data from your customer demand inputs. so taking silos in your enterprise and bringing them
together and then optimizing production operations to get the most value from the daintegrati. i'll give you some examples. within rockwell itself, we started our journey with the connected enterprice roughly about six, seven years ago. we started out by rolling out an erp system which many companies have done in the past decade. it's not just the erp system but we started transforming the processes. we started working on people, processes and technology to integrate the data and optimize our processes. so a real example, seven, eight years ago, when we promised a bill of materials, products to a customer, roughly 82% of the time, we delivered on time. so 28% of the time, we missed the delivery. right? so that was not acceptable.
today it's 9% of the time. so when we go and tell a customer they're going to have this customer they're going to have a bill are materials, 98% of the time, we deliver on time. how? well, now, we have full visibility into customer demand. we know what the customers are buying. we produce roughly 300,000 products. so knowing what the customers are buying, knowing where the demand is allows us to produce to the demand. it allows us to stock in our distribution center, the products in the highest demand. it also gives the visibility to our sales force to sell products that are immediately available. we call them preferred products. it's no surprise that we discovered there are about 30,000 products that we sell 80% of the time. so having the visibility into what's being consumed using that to drive the production processes got us to the 9% number using this connected enterprise concept. when we talk to manufacturing companies and we asked them what
do you want from all this technology evolution, they come back with four things. they want faster time to market from a new idea for a product time to market, they want to optimize that. they want to reduce the cost of production. if you look at electrical energy, roughly half is consumed by industrial operations. a 10% reduction in the u.s. alone is $6 billion in savings. so reducing cost is a major driver. the third area that most manufacturing companies will tell you that is a major today is uptime. they want to increase their asset up time. if you walk into a food and bev ty factory most machines are only up 60% to 70% of the time. so 30% to 40% of the time, they're under maintenance, may be cleaning. may be routine updates to the machines that are being made and that impacts productivity in a huge way. the final area that's real important is enterprise risk reduction.
this is building and more safety and security. it's making their environment track and trace. so for example, if you have a recall whether it's food or farm marks they want complete traceability throughout the supply chain. it's another very, very important requirement that a lot of manufacturers have. these are kind of the four drivers that we are focusing on. and a lot of the innovations that are coming out of rockwell are helping our customers achieve these four major drivers. so how do we see manufacturing it evolving in the future? today, we could say that to some extent, manufacturing is modular and in its own way, it's a cure. of course, security is never done. this is a continuous process. where we are going in the near future is towards making manufacturing more predictive and optimized. a lot of machine learning,
artificial interrogation technologies, analytics, cloud mobility all of these technologies will move manufacturing towards becoming more predictive and more optimized. where we want to go towards the long-term vision is to make manufacturing self-healing and self-optimized. that's kind of our long-term vision. probably 10 to 15 years out. but we see a change today. in the past, manufacturers were looking for low cost labor, they were looking for tax holidays as we heard this morning again from intel. they were looking for locations where they could put manufacturing where they could benefit from these cost incentives. what are they looking for in the future? they're looking for putting manufacturing where there is technology innovation, technology innovation that will help them solve problems like safety and security while connecting the manufacturing plant with the it systems so as you build more connectivity, obviously there's going to be a
major security risk. so they're looking for good solutions for safety and security. for integrating it and ot securely so they're looking for environment where there's a lot of innovation in technology. they're looking for environment where there's talent. again, i don't need to repeat what we heard this morning about talent. there's clearly the change in the talent that's needed in plants today, manufacturing plants today. a lot of the jobs where a person would shovel coal into furnaces are gone. that's not being done today. so with a lot more automation, with a lot more networking we need to networking experts, security experts. we need to people who understand how the internet works that also are living in the plant environment. so clearly there's a change in the skill set that is needed and we heard enough about education so i'm not going to belabor that point. finally, policies and procedures. we saw a luncheon speaker draw this exponential curve. if you look at manufacturing,
that curve is the growth in regulations. we need to friendly regulations. we need to friendly the policies. in the future, that's what manufacturing companies are going to look for. so my final comment, i would love for the council to continue its leadership of manufacturing. we need to public/private partnerships. we need to all your help. we need to help to get manufacturing to its next evolution. and it won't happen without public/private partnerships. so thank you again for giving me the opportunity to talk this afternoon. ladies and gentlemen, please welcome mr. adam conn, founder and ceo of aconn semiconductor. >> thank you very much. >> before i begin, i'd like to thank the council for having me and great them on 30 years. it's a very important time now s in technology and maintaining
competitiveness particularly within our field of advanced materials is absolutely crucial. i've been looking forward to this talk for a number of months. earlier this year i spoke at the forum of the americas in toronto talking about riding the wave of disruptive technologies. it was disconcerting to hear that the u.s.'s position in terms of competitiveness particularly within technology was being questioned. so one month ahead of the consumer electronics show, i'm so delighted to be able to talk about the work that we're doing and how aconn semiconductor and our partners are not only advancing innovation technology but also advancing our competitiveness through manufacturing of clean technology, opening up the possibility to a number of very captive and key markets. so there we go. so i would like to frame my talk within the context of not only the innovative side of technology but how it's going to make the u.s. more competitive. and particularly amongst
aerospace military consumer telecom and automotive markets. the global semiconductor market is a huge market, $350 billion market worldwide. specific to the united states, it's actually the third largest contributing to gdp right behind aerospace and pharmaceutical. but more importantly, it enables over a trillion dollar global market. within these markets, three key sub markets are actually very limited. power devices, things are overheating. the power efficiencies are about 90% inefficient in current ic systems. not good. wearable systems. we have new technologies, augmented reality, virtual reality. very, very important not only for none but also for military defense capability and sensing in addition to other industries. so $40 billion market projected with a very competitive compounded annual growth rate. additionally the military sensor and detector market is a very key market and all of these three markets are quite limited
by the present materials capability. so as the logo probably infers, we specialize in diamond-based semiconductors. diamond has been known for quite some time to be a very efficient material and perhaps the ultimate semiconductor material. diamond can conduct heat five times more efficiently than copper the currently status quo material in thermal cooling. above and beyond that is the highest frequency capability, power handling in an decision to numerous other attributes which makes it very, very favorable for today's electronics as we're all seeing different types of cell phones, i won't mention any specific names not to hurt any customers' names that are insin lating on powerup or being ship had had damaged. we know heat is still a major issue. and from diamond, we can see not only superior performance, increased energy efficiency but thinner profiles continuing the trend of thinner tech, the next
big thing. for me the next big thing is going to be fully transparent electronics. because diamond is a transparent semiconductor material. it can be married in with glasses, was transparent metals and you now for the first time have the ability to have fully transparent electronics. our earlier work in clabting with national laboratories, as well as other universities like the stanford fabrication facility has been focusing on actual molecular engineering going down to the atomic level with nanocrystalline diamond and jerring them to have semiconductor properties or alter the transparency or the mechanical properties. it's been quite a eve demonstration in terms of showing the capability of diamond because when we compare a device we fabricated to the state-of-the-art within the silicon market, we see not only is the device over 1,000 times thinner, it's over a million times higher in terms of current density, extremely efficient
material. this is perhaps five to seven years out in terms of semiconductor cycling. it takes about ten years to bring a chip to market. that's not to say there aren't innovations in the existing market, the so-called low hanging fruit. so from an r & d perspective, if we look at optical and thermal needs, transparent electronics market and semiconductor device, we can bring numerous innovative solutions to much needed problems within aerospace and the automotive markets. for example, within the aerospace market, today we're developing optical windows to make the existing counter measures systems more efficient which can better detect incoming ballistic signatures as well as have high reliability and efficiency so they can survive battlefield conditions, flight conditions, et cetera. but i think for us nothing speaks more closely to our individual lives than consumer electronics. because we all have cell phones
and enjoy using our automobiles which nowect and give us messaging and won't leave as you loan. but with aconn semiconductor we've been focusing on building a diamond prairie. this has been a public/private partnership. as much as i would love to take credit for the name it, came from senator melynda bush who was very instrumental along with the village of gurney in having us relocate and head quarter in gurney, illinois. we're globally headquartered there with our executive, operations, engineering and manufacturing support. not only traditional semiconductor labor but also engineering the new wave of folks to work on advanced materials manufacturing. so it's an excellent spot in terms of addressing the next generation of competitive labor and manufacturing. this individual site is the world's first c moss compatible eight-inch semiconductor line. no other line is readily insertable into the marketplace to be able to process other
materials. and as a part of that signifying this partnership, we actually were the recipient of a $6.4 million incentive package between the state of illinois as well as the local, county and city. and so the technology in itself is exciting but you want to have a very stellar team behind the technology. we're proud to announce earlier this summer we brought back key elements of motorola's razor team to help bolster the technology. our chief operating officer is formerly director of engineering as well as formerly of argonne national laboratory in addition to others down on the design level after announcing bringing on this talent, we had to do something very exciting within cell phone, right? we announced the third party test results of our diamond on glass technology. this brought to the question of the world can diamond actually provide what we need to in consumer electronics, skras
resistant display, a harder display so we don't have to shell out $129 every time we drop our phone. and more outlets picked up the story. so around 40 to 50 different outlets around the world reported on our third party testing results for diamond and glass and the speculation was going absolutely wild. when are we going to see a diamond screen for cell phone? so i thought today, for this audience, i would bring the world's first diamond glass screen. and show you that not only is it here, it's already been sized. when we do something like this, we make this for 300 million units. this technology is here today. and actually, the next question after this was this is great. this is something for a diamond screen or for a wearable screen but what does this mean in terms of the readiness of the technology. i thought we would look at the comparative material properties between diamond and the rest of the glass market and when you can really see that diamond is not only much harder, higher
strength resistance but much higher thermal conduct activity. when your phone is to your face, it's going to be running much more cool. from 800 times thinner profiles compared to the leading glass competitor, we see over six times harder material, six times stronger material and over ten times harder material all at scale which means that we can actually produce this on a per unit cost basis. but if you check the papers this morning, we upped the ante and announced the world's first diamond glass lens. and this was very exciting because this is on a commercial bk7 glass. and so between these two products, we actually have the entirety of the addressable glass surface on your consumer electronics devices. when we talk about the prospect of a diamond age and talk is this material ready for market, we're not only seeing it being deployed in today's military technology systems and being integrated but the broad broad spectrum of consumer
electronics. that's exciting because this was an idea not only originated in the labs with the united states, developed here researched to scale but now brought to pilot production. so i thought this was a very stellar way we could state that innovative science started here, will be developed here and we have committed to actually bring this to mass scale. so thank you for your attention. we are very, very proud to be doing this in the midwest and please track our efforts under the diamond prairie. thank you. [ applause ] . our next panel will explore opportunities, talents, technology, investment and infrastructure. ladies and gentlemen, please welcome mr. jim bosilli,
cofounder, institute of new economic thinking and former chairman and ceo, research in motion, mr. mike fucci, chairman depolite llp, mr. jonis pricing, chairman and chief executive fer, manpower group, dr. carroll l. folk, university of north carolina, chapel hill and miss nia-malika henderson, senior political reporter, cnn. hi, everybody. thanks for being here. it is great to be here with these folks here. we really want to start the four pilars, talent, infrastructure, investment and technology. we want to start talking about talent first . i want to start with you, jonis. this is something you've written about, the idea of learnability,
the idea of about upskilling. what do you mean by that? and what sort of responsibility do you think employers have in terms of that area? >> part of this day has been really encouraging from the aspect of talent. i think ever since we began our morning with dr. khan, dr. crow, bran fairer for lunch, fred smith, everyone has talked about access to skilled talent as being an absolute necessity for our nation to be competitive. in actual fact, it is true not only for the u.s. but true for all of the developed world as well as the developing world because the labor markets are being affected by structural changes, technology, globalization, demographics so an aging workforce, an aging population and developing and developed countries alike individuals making different choices based on changes in environments and organizations
thinking about organizational agility in a very different way. so all of this translates into a bifurcation of the workforce. and i think it was dr. crow who talked about in this morning that out of the u.s. workforce, there are 60, 70% of the workforce that is fully employable that has the skills to participate and be competitive in the economy and 30% of our workforce and population that is not participating. so the biggest challenge that is facing us to be competitive is going to make sure that we as a nation have access to a broad pool of skilled workforce. we know today that 30% of the workforce has a low or is unskilled or does not have enough skills to participate and be successful in a global competitive environment. so that will be the defining challenge of our generation to figure this out because as bran fairer talked about during lunch, if it's a very complex
structurally driven global issue, there's not going to be a simple answer because we've known about this and we've seen indicators of our performance in terms of skills, compared to our global peers as nations you know for quite some time. this is not new but we've not been able to make the turn. in actual fact, i would argue the current friends of bifurcation of the workforce, polarization between the haves and have nots based on skills they have to productively contributor to the growth of organizations and to our economy is going to accelerate. there's no indication it's going to mitigate and or you know, converge at this point. so that's what's going to be so important for us to figure out. >> and carroll, one of the things that's going on jonis docks about this bifurcation in terms of the workforce, one of the things that also seems to be going on is decline in investment, federal investment
in terms of science. is that a trend you see reversing? has it stalled? i mean, where do you see things now. >> i get to start off with good news because just two days ago, congress did pass legislation that was going to increase nih. by about 4.8 million for very important targeted areas and another $4 billion and another $4 billion on an annual base. i think for all of us, that is good news. and we're excited about it. i think that the needs are greater and the opportunities even greater. and i think that's where we start thinking about how can that investment be understood. can we do a better job making clear that if an investment comes back, people have been arguing that we can make clear that that investment isn't only going to help. it's critical. so i think of it as being an investment in the workforce. we can probably talk about that more, but universities are places where in these areas of
science, technology, that's where the young people get excited. they get the skill sets. we made a bet in america after world war ii that if we brought innovators into universities where they were also teaching young people, we would create the entrepreneurial mind-set necessary to stay great. when the money starts drying up, those people have a harder time doing what they do. they tend to retrench and not be -- they become more risk averse. they tends to become less likely to increase the embrace of lots of different areas. so that talent force changes the idea force changes. so another piece of good news is that it's related to bad news. last year, nih had 50,000 proposals. and i'm going to tell you, i'm a reviewer as are many people in this room. at least 25,000 of them had amazing work in them. if you run a business where you're throwing out 25,000 great ideas every year, you have to
start wondering about your business model, but if we start increasing that even a bit, with we've got people ready. so if the money comes in, we're not in a position where we have a desert of ideas. it has the capacity to really fuel economies. and i know all my colleagues out there could say they had these studies, but a little bit of fuel from the government, for example, at chapel hill, we did a big study for every dollar we get from the federal government, we generate $7 to $9 in additional money that goes to fuel research back to the economy. we hire 100,000 people in the state. so i mean, i could go on about that but i think the good news is, that should these investments increase, we're ready. the bad news is that if they don't, these pipelines that are holding on could hit a point where it's going to be a lot harder for them to actually take advantage of what is sitting
ready for us as a nation to use for competitiveness. >> mike, i want to go to you on this. another pilar. infrastructure and deloitte's certainly done research in terms of the manufacturing sector and a lot of emphasis on that in terms of this new administration coming in. you guys have specifically done research on vulnerability of infrastructure in terms of cyber attacks, something i hadn't necessarily thought of. can you talk a bit about that. >> yeah, i apologize for my voice. >> it's kind of sexy. >> i don't sound that way. >> very sexy. >> it's a very interesting dynamic because what we're seeing is we're seeing that right now innovation is the pillar of growth. i really love what braun said at lunchtime around the fact that you must be innovative. carroll stayed about the entrepreneurship but what we're seeing is what happens clearly is the ability that human error
cyber security becomes an open issue with innovation. and the conundrum that any company has is, you don't want to stifle innovation and therefore, you have to keep going and as especially in a manufacturing sector, as things get more complex, using ecosystems so not only developing your own product but working with other partners to develop a product and bring it to market. you're only as good as your weakest link and you can't really secure yourself against human error. but it really does start number one is at the top. every organization from the board to the executive needs to have cyber security at the top of their list. everything they do, they have to make sure that not only are they supporting innovation but they're doing it in i call it the word i use is a harmonized way making sure that they're sitting back and looking at their cyber security procedures
and continuing to look at them because it's not something that you can put together once, put on a shelf and then not remember it. they need to be updated every time there's a breach, they find something else out. but you can't stifle innovation like braun said. it's important. things are getting more complex, more globalized using ecosystems. it's really a balance of how do you push forth innovation while at the same time watching for cyber risks. >> and jim, i wonder if you could talk about america in relation to where other countries are in terms of investment in infrastructure. we talk about this global economy and this global race towards innovation. where is this country? >> yeah, thank you. i think i'm going to build a little bit on what fred smith said this morning. and i think as you tried to drive your innovation globally, you have to really assess the
ecosystem globally that you're going to participate in. because that ecosystem determines the receipt activity and capacity to commercialize your ideas globally. and over the last 30 plus years, the primary underpinning of the system we've used is calls the trade related intellectual property system underpinning wto and what was happening through tpp which mr. smith was advocating is generally trawled tripps plus. in europe with ttips said i'm not in for tripms plus, i want trips. china says i'm more interested in trips minus. i mean, i'm not trying to be pejorative but you can make a fair case for that. i'm simplifying a little bit. then you have a new administration that's saying, i don't like trips plus. is that because it's not good enough? i want trips plus plus?
or because trips wasn't right and i want to look at something else. so this is an uncertain environment to commercialize in. there are rival risks. it's mercantilist. i find it highly unlikely they're going to come together in the near term. and so this is a different situation for commercializing globally in the next decade than we've known in the past 30 years. i study these things a fair bit. one study i engage on it i should say. one study which is very interesting for your chair is in agtech patents, last year, 92% of all ag tech patents from university research were from china. so they published over a million patents. so this is a land grab. and good game theory is, stay
out of the game until you get enough land and then come back in, which is rival risk and mercantilist. so i don't -- i think i personally believe this is the most pressing issue to globalizing right now because the rule systems are diverging and becoming quite political evidence what's happening in the election and the relationships to the east and to the west. and all of their turbulence and nativism. so i think this is going to be central to figuring out how we commercialize ideas in the next decade. >> and carroll, i wonder if you could talk about one of the things that the obama administration has tried to do is put a focus on s.t.e.m. education primarily focusing on women bringing more women into the field encouraging girls to go into s.t.e.m. fields. has that mattered at all?
have you seen a difference in terms of conversations around that or in terms of interest? >> well, i think everyone that is in higher ed spends a lot of time trying to think about these disparity gasp, about the changing demography of america and the fact we look around this room or look around the rooms in higher education at the top, most of us look the same. and there aren't that many that look like me and fewer that look like a lot of our students. so we think a lot about bringing them in. i do think even going back to title 9, that's had a big influence in bringing diversity into our infrastructure and our research. a lot of the best examples of the value of diversity research teams actually come from entrepreneurial areas where they talk about you put six people in a room that all come from the same background, you get the same idea. you put six people with six different ideas, six different backgrounds and you get something that is really dynamic. i think this goes back to me
about investment. one of the great ways investment in research and i'm talking mostly university research but it's all research. one of the things it does is it does give us a chance to also address other societal problems. we use that research to develop a diversity team of young people who start fueling as they move up with ideas like the way the obamas did it or universities where you get more and more people, you're going to see the diversity of the ideas increase. and we have a chance very much to start also reducing those income disparities that go with people thinking that they're limited to disciplines in certain, you know that, women can't do science or students of color can't become engineers. as we eas a those boundaries we start doing immense good not only for the science, the s.t.e.m. that we're doing but also for the goal that we have to diversify the workforce and make the talent pool so much
more energetic. i think they go together. >> jonis, you want to jump in. >> not only are we making it much more energetic. i think the business, you know, the clear business case is that diversity of thought drives better business outcomes. the participation of women depending on where you are in the world, is either lower or significantly lower than that of plen but in almost all of those cases, the level of education for the very same women is higher than it is for men. so if you think about a demographic that is shrinking in all of the developed world, all countries in europe have a shrinking population with one exception which is france. we are holding our own but within our own country, roughly the same demographic tendencies are occurring depending on ethnicity. so our need to bring in skilled talent into the workforce is huge and women is actually the biggest untapped pool of skilled
talent that is not fully utilized today to varying degrees in developed countries. that's certainly the case also here in the united states. >> there also seems to be, jim, sort of a turn away from globalism and thinking that america is part of this larger economy in terms of immigration, in terms of bringing talent in. i mean, is that going to affect kind of diversity if there's this shrinking away, jim, from thinking that america, yeah is, part of this global economy. >> oh, i think there's -- there's without a doubt a talent war, no question. but i think america does exceptionally well because of the quality of their education institutions and the base of their companies. so you have a bit of an embarrassment of riches but of course, it can never be good enough. but you know, how you manifest that, there was a comment from the gallup gentleman who said though there's more innovation business formation dynamism is
going down so i do think how you manifest all this into prosperity and productivity, i believe the gating element is much more infrastructure. personally because as dr. fulse said, there's a lot of talent out there and not the infrastructure to receive it in her case. so you know, i mean that's more in a research thing than in a business formation but i think it's a pretty good metric. i think infrastructure is a very, very important piece to look at. and i think again, i'm trying to build off of things like mike talked about the cyber people are all excited about block chain because it allows all this stuff but also allowed people to do things without being trapped. so a lot of these things raise complex issues all along the way. >> mike? >> one thing the question about s.t.e.m., what we realized in
the business environment is we've been a huge proponent on s.t.e.m. the majority of our businesses at doe loit need science technology, mathematicians. but we're down into high schools now. we have to start earlier and earlier. we're talking about programs for freshmen in high school because we believe that now you know, when you saw internships in sophomore years of college, it's not good enough. we have start much younger. that was probably a big aha we've had. if you speak to the younger generation, people in their 20s who joined us in the past five, six years, they look at things totally differently than someone my generation looks at it. and they believe that you have to start early, you have to start getting those diversity skills you know embedded much, much earlier. so we're putting in programs now looking at as young as freshmen in high school are totally different than when i started. >> does anybody have questions in the audience?
>> yeah, i have maybe something to add to what mike said. you know, when we talked about skill shortages, we survey employers all over the world and also here in the u.s. around their need for talent and whether they think they can find the talent and labor markets. what we see today is that 40% of the employers we survey here in the u.s. are saying they have difficulty finding talent. what's encouraging is that almost 50% of the same employers are now saying that they are investing in training for their workforce. where it's the same answer would have been a 20% of employers saying they had a hard time finding people but only 12% were investing in the development and training. and you know, that i think is going to be key and it comes back to the question you asked at the very beginning. organizations will have a responsibility and a self-interest in making sure that they develop training and development for the workforces that they have. but longer term, we believe that
the best predictor of employability may well be something we call learnability. so the desire and ability to learn. we've talked a lot about the changes that are occurring in markets through changes in globalization and how the mechanics are changing and the different forces. it's going to be very difficult for employers and educational institutions to predict what the skills are going to be 18 years out that are going to be specifically on the hard skills that are going to be needed. of course, s.t.e.m. skills are always going to be in demand in a digitized world. so the ability to have a workforce that is used to acquiring new skills as they go along will protect us and will render us and make us even more competitive through the time. we think that's going to be a key driver of employability. we think it can be one of the biggest drivers of competitive advantage if we crack that, we have a workforce that will stay competitive not only be you know in phases competitive and then
having to catch up like is the case right now. >> doctor. >> i love what you're saying. one of the ways we talk about at universities now is we need to develop a whole generation. i love the idea earlier that competitiveness might be measured at a big metric but it only builds from a lot of individuals. and those individuals that develop the skills of a researcher, the synthesis, the probing, the grit, you hit a wall you turn. you have an empty canvas as an artist, you build something new those are what we used to do the best anywhere. i think that was the real surge in america. and if we dry up those pipelines, we really do dry up that inventiveness. so by fueling it and doing it in such a way we build those partnerships, we actually start every single student every ingle learner has that capacity to be that innovator. i think that's part of the good news too is that the investments that it takes is actually small. so what is nih is $30 billion?
the health care is 3 trillion. these are someone said rounding errors. each company has capacity to build these partnerships with universities in ways that can be amazingly transformational for every single individual. and if we don't do that though, we don't have a chance to really expand this at the rate and speed we want to. universities have a lot of real estate, for example. we're starting to share that with business partners and bring them in. we've got this capacity to do it and i think we're at this moment where a little bit especially given the willingness to reach across the sectors seems to be at a point that it really could escalate, you know, but it needs that intention that i think meetings like this give us when we come together and talk about it. >> jim, in terms of what you would want to see in terms of emphasis and investment and
moving forward, from the private sector from the government sector in terms of partnerships, what do you -- what do you want to see and what do you expect to see? >> well, i think rco, deborah said it earlier today that innovation has had unequalled distribution leapts to it, and so i think you realize when you don't pay attention to that it rears itself in surprising fashions and now of's grappling with that. so i think everybody sold this stuff as trickle down and everybody would get a fair shake and in fact, it didn't work out that way within states and between states. and i think that's a lot of reason why people are pulling back right now. i'm not trying to just say let's just spread everything to everybody. i think the inattention to the investment in distribution it's not a justice thing but you could make it that case. i think it's a functioning society thing. so i think that's really, really
important. there's no end of possible innovation things you can invest on. you've heard them all today and they're very, very compelling each and every one of them. i do believe that how this is going to work in the world, you've seen how europe's pulling back. you've seen how -- you've seen the rattling with china. you've seen tpp go up and down and people saying come on, bring it back up again. i think that's going to gate a lot of this really good talent and this really good desire to invest. and i think the new administration is going to be overwhelmed with the things they have to do. so i would say distilling these things into clear priorities would be the thing that i would think would be the most constructive thing to do in 2017 about this new administration. and that's going to be drinking water from a fire hose and try to get to some kind of
manageable way that you can move ahead on it. >> and mike, what's your sense? >> i actually agree with what jim said. i would say though that from a business perspective there's a challenge between looking at innovation and not tying it to kind of a short-term p & l look at it. innovation is long-term. i think at our firm i know, one of the challenges is the ability to, you can't innovation isn't a yearly thing. it could take something five, six, ten years. you have to -- if you get behind something, you have to stick with it. there's opportunities at times the market changes. financial changes. first thing people want to do is want to cut investments. really it's really the long-term investment. to your point, you have to be able to call something if it's not going to work, it's not going to work. you have to be able to call everything that's inknow ratetive doesn't mean it's going to work. and the ability to seed out what is going to work and what is not and if it is going to work
invest in this long. sometimes we're very short sighted. >> doctor? >> i'd love to say thing about that. one of the ways universities have a different model than businesses is that we have to invest also in the discovery-based long-term. so big examples, zika virus, we would be nowhere on zika virus right now had we not had researchers studying all sorts of things that had nothing to do with zika virus. and then when it comes up, those ten individuals across the country who had been working along on that were there. another example is crisper. this whole movement towards complete rethinking in transformative medicine might have started 30 years ago. i was hearing by someone who was actually looking at viruses and bacteria. it didn't look like anything but it took 30 years and suddenly we are on the cusp of the biggest invention. i'm really glad you said that because we need to help the new administration understand that directed research is wonderful.
we love it, we can doing great things with it. but it all dries up if we don't continue the basic research. i this i that's what you were saying. i really appreciate that, too. >> and jonis what about you in terms of a new administration encouraging them to focus on what exactly in terms of innovation? >> as we think about the areas that could drive really tremendous growth for us investments and infrastructure, you know, a reduction of regulation and, of course, making you know, the labor markets competitive and also you know, ease of growth in terms of companies and their ability to attract talent, the key issue is going to be reskilling and upskilling individuals that are today outside of the workforce. and the ones that are in the workforce upscaling them while they're there so they can continue to evolve. right now our employment is at 4.6%. we can argue about the workforce participation rate which is lower than it was before the
recession. so give 2% regardless of which we are you know, following a number of hallmarks of a reasonably tight labor market. there's certainly slack. some are underemployed some left the workforce. the ones underemployed and that are -- that are outside of the workforce probably at this point don't have the skills to actively and easily participate in a lot of the things that strong growth could generate. so i think that's going to be a systemic approach both and i know the panel after us is going to talk about education and the need for education in the long-term but certainly in the short term, you know, to deploy a lot of people into infrastructure projects is going to be challenging because you know, speaking to a number of the companies that are involved in big infrastructure projects their biggest problem is finding infrastructure engineers. and that's going to be the reality of hitting into the shortage of talent that can realize so many of those things.
so my hope and optimism around this would be that there is a structural and systemic approach around really rescaling the american workforce. so a skills revolution in the budding is what we're hoping for because we think that truly can drive our competitiveness to untold heights and not only in the short term but also in the medium and certainly in the long-term. >> any questions out there? there we go. >> hi. martha from the college of engineering text a & m university. i have a question for people who come from industry. as we invest resources in programs to educate engineering undergraduates for innovation and what we call the mind-set of entrepreneur, what are the tools that you believe are the most important things in knowledge and skills that we should be focusing on?
thank you. >> who wants to take that. >> you want to go first. >> we're probably all working on that same thing. i think it is these skills of learning when you've hit a wall how do you turn and develop the sin thesis for other skills. i think she wants to hear what you in the business world would tell all of us at universities. >> well, i'll try. so what i would say at university would be i think you used the term the inquisitive mind. what we're looking for out of students is even if you come to a firm like ours and think you know what you want to do, have the ability to say in two years, i may use that skill and do something different. i mean, the difference is coming in, you know, when i joined the firm, i kind of had a career path of ten years. you knew what you wanted in ten years. now we want the students to almost make two-year commitments because innovation is moving so
quickly we don't want to lock them in for something. we want two-year commit ps and then in two years, you may have an engineering background but we may want you to do something else. it's kind of almost a multiyear commitment to continual learning. > so really, the balance between the hard skills and the soft skills. so the axis, it's going to be more about not only what the hard skills that you come out of school with but also the soft skills that let you apply it because access to knowledge today is ubiquitous. hard knowledge can be acquired. experience can be leapfrogged because you have access to an understanding at a much more rapid pace today. so this notion of transferability of skills between industries and between various aspects of what you do within an organization is going to be increasingly important. >> jim, you want to jump in? >> yeah, in the innovation game generally innovation has zero marginal production costs and
you're certain you're trying to insert yourself into a value chain which all has the marginal production costs. so that's an extraordinarily contended exercise. and so people who have these very sophisticated s.t.e.m. cells if they can marry them with the very sophisticated commercialization navigation skills which are very different in the ideas economy than the traditional economy, that's gold. you know the people that do that well because they have extraordinarily valuable tech companies. that's the dance that you do. and that's anyone who brings those to an organization while they're on the c street, they're in the c suite quicker than anybody else. >> the exciting thing about universities, the youngest generation coming in every year are most excited about doing this. i walk down the hall and i meet students who started their first company in their first year and already talking about the second, third and fourth companies they're going to start. again, that's another part of the hopeful part is that when we give them just the tiniest bit,
they're ready 0 leap at it. but i think they want to know what it takes to do that and they need to have the chance to have a risk/fail, rick/fail and be successful. so we've got the material. and the opportunity. so we just have to get those double p, what was it. >> double t squared i squared. >> on that note, which is very hopeful, we are going to end. we thank you guys for your questions and your attention. >> thank you, pleasure. [ applause ] >> to address the nation's skills gap and how to better prepare mers to join the 21st century workforce, ladies and gentlemen, please welcome the president of northeastern university, dr. joseph e. and the president of northrop grummon corporation, mr. wes bush.
>> hello, wes. good afternoon, everyone. i would like to start by thanking the council of competitiveness. you brought us together. we are old buddies now. we have been doing that for some time. last month, wes was at northeastern university and we had a dialogue like that. we want to talk about the skills gap. and we have tons of surveys to share with us. but the surveys are an indication. they don't provide you with the solution. let's start by discussing some of the surveys that the business roundtable has been doing. actually, you have been leading those. so give us a flavor, wes, of what you found out. >> so the business roundtable just recently did a survey of its members. not surprising, because i think the survey results were quite similar to other surveys the
chamber has done as well as other independent or nonbusiness organizations. i would say there are some elements of the survey results that you could predict but there were also some interesting insights. some of the more predictable survey results were the number of companies, and in our case, it was greater than 80%, that cited a significant skill shortage in their ability to actually find the talent they need and to support the business objectives that they had. not surprisingly as well, much of that skill shortage goes to the s.t.e.m. disciplines. just about every survey you see, you get that sort of flavor and s.t.e.m. is a big category. i think we all often think of the engineering shortage that we hear so much about. interestingly, in ours, the mathematics part of it and the basic part of it were identified as shortages, as well. in addition to the disciplines,
though, some of the other feedback that we have got in the survey, i thought was particularly insightful was the identification of some broader sort of general applied skills that from a business perspective we all look for and we try and keep track of how well we are doing. things like critical thinking, the ability to attack a problem and really dive into it and test a lot of different perspectives and come up with innovative and different perspectives. cognitive flexibility was another category we saw identified by many, many business and, again, i think as a reflection of the pace of change that we have in the business environment, in fact, in the world around us. it was for me a confirming survey of many of the things that i have seen in other surveys. it was insightful in some areas i don't think it quite got the attention it needed. >> let me take the compliment set. we just surveyed the college students nationwide. we didn't do it ourselves. we commissioned a firm to do it.
what we found is that only 14% of the students feel they are ready for the new world, for the a.i. world, for intelligence system for the tech revolution that they know is going to hit them. they know the jobs are going to be redefined. it is interesting to compare the employers and at the same time the learners. the employers keep saying, you know, colleges and universities are not doing a good job. the college students, only 14% feel that they are getting ready for that. so clearly, we need to do something together about it. and that's why we're here today. we are hear to talk about partnerships and what can be done. starting with you, wes, you have been working with many universities. you have been partnering with universities. we have been partnering with universities.
what do you look for in the partnership? >> there has been a model out there for a long time that businesses utilized and working with universities that has served some of the interest of business. but i think there's been a broader awakening that we need to develop some very, very different models. the older model was a combination of obviously building good partnerships with the career office. because we want to make sure that we're there and are represented well and are branded well when it cops to the recruiting. but also, sponsoring research and development was sort of a traditional model. and oftentimes, it was just straight old philanthropic giving which is good. all those things are really good. >> we like it, too. >> and it's important that we continue to do those things. we have all realized it is just not enough. it is not solving the problems that we are seeing. i'll have to give a lot of credit to the business higher education forum. we are members of bhef and have been for some time.
>> a number years ago through a series of discussions just like this where we continued to identify these problems, we decided to pilot some different approaches and test what would work and what would not work. we have found some models and we've applied it now both in the fields of cyber security and in the field of data analytics and in a number of university settings around the country. to your question about what are we looking for, what works, first off, you have to have a partnership approach and it has to work both ways. the university has to be open to engaging with business in a little bit of a different manner, and business has to be open to changing its model of engagement. what's been working in these new models has been a much deeper level of collaboration. it goes all the way in many cases to a co-development of curriculum. where business makes an investment and the university makes an investment. and faculty comes together with employees of the business to define what some of the
curriculum components need to be to better prepare the students. now, this isn't a training program. i want to be careful about that up front. often times, people hear this description and think, okay, we're turning university into training. that is not the intent. it has to be education and broad education. because directly to the point that you were raising regarding the feedback from students, we want students not just trained for the one instant thing to come into business. we want them to work for us over the course of a lifetime and continue to grow. they need that broad education. to start with, to have that capacity to grow. that said, there are some basic things that they need today to get started that perhaps they did not need some years ago. this model of engaging more closely with business around the notion of developing curriculum. how we do things like internship and co-op program, northeastern is really from my perspective the world leader in defining how to have co-op programs be most
effective. but actually engaging in the design and development and oh, by the way, in the funding of those things. business has to step up and work together with the universities so these things are supportable. none of these things are inexpensive. awakening across the business community that we can't simply stand by and conduct our surveys and complain. we need to be engaged and be a part of the solution. we look for universities like northeastern that are eager to partner and are eager to actually help us learn about what works and what doesn't work. universities like northeastern bring so much to that engagement. >> thank you, wes. when i talk to my colleagues in higher education, that is clearly in a big unease about. we don't want you to come and talk to us about how to shape a curriculum. however, at the same time, when we get together with our employers and we sit down, we
have 3,000 employers working with us. we send out students on six months long-term internships called co-ops. when we sit down and look at the type of person we are looking for, it is clear that we have to change the way we are doing it, the way we are providing education. what we are hearing from our employers is really simple. we need you to get our learners, our students ready for the new economy. what does it mean? there is a new literacy. we all know about it. they need to know coding. coding would become high priority. they need to know about beyond the tech literacy, data analytics, big data. they need to know about the human interaction, what i call the human literacy. you are here as leaders. you didn't become leaders because you were great engineers only.
but because -- >> that does help, by the way. >> yes, especially for you, wes. you knew how to lead people, how to motivate people, how to understand people. that's what we are not doing well enough of. the second aspect that i want to discuss with you, wes, here is that i am afraid that we in higher education are giving up an enormous opportunity. we are in the middle of an enormous revolution. there are new ideas and jobs that are coming to the floor and other jobs are becoming obsolete, and people have to retool. people have to refine what they do. the notion of lifelong learning is with us. higher education looked at lifelong learning as something very peripheral. we don't want to touch it much, because we want to focus on
18-22, undergrads. we want to do research in ph.d.. but don't talk to me about lifelong learning. this will bring down the brand. in fact, we're becoming like the railway industry. i hope there's no one here from amtrak. the very industry missed the transportation evolution because they defined themselves as being in the railway industry and not in the transportation industry. i think that's what's happening to us in higher education. we are not thinking of ourselves of being in the lifelong learning mission. so when i talk to you, wes, i ask you, you have employees, you are recruiting employees. you cannot say to them, you are set once and for all. >> heavens, no. >> what do you look for? you must have extensive training, correct? >> absolutely. >> to have them retool, to have them get into new phase.
every time a company tells me that they have set up an educational program, it is a failure of higher education. higher education has to do it. what do you look for in lifelong learning? >> let me say a couple things. one, most companies don't want to be in the education business. that's not what we do as our primary business. but most of us are. in fact, in the survey that we did in the business round table, on average, across the company that we surveyed, on average, companies were spending about $80 million apiece on continuing education of their employees, much of which were internal investments because they didn't have these partnerships. they didn't have this capacity to work with the universities on this continuous, lifelong training. we look for universities that have that flexibility to deal with beyond the 22-year-old age point or the ph.d. age point and engage with us in the
development of programs that our employees can benefit from. because despite what may sound like a criticism of higher education, let me say up front, i am a strong believer in the united states we continue to have the very best higher education system that exists on the globe. what we are talking about is improving something that's great but we have to improve it. because our needs for this, whether we're talking about the economic security of our company or the national security of our country, we critically depend on the quality of higher education and the engagement of higher education. so these partnerships really are opportunities for us to connect in a deeper way and more meaningful way. and as a real opportunity not just company level. it comes down to the employee level. this means a great deal to employees. >> when we start talking about those partnerships and those opportunities, it led us to
rethink our own model. for instance, when you work with people who are long on experience and short on time, namely the professionals who are already in the field, you cannot tell them, come and spend two years with me. no one has the time. so universities have to move into the short what some people call the boot camps. actually, you know what happens, is there are companies that start boot camps in coding. why are they doing that? they're doing that because there's an enormous need. now the need will be fulfilled. in terms of data analytics, we started a boot camp. that was the first for us at northeastern. i think we were one of the first, maybe the first university to have done it. because we had to learn, if you want to meet the need, you have to meet it based on the terms of the company or the people who want to learn about that. come here for a certain time.
you know, whether you are in the company or whether you are with us, it doesn't matter. but you don't have time. we're going to provide it around eight weeks. similarly, you know, we have to devise a new curricula. when we talk in higher education about sitting down with an employer to look curricula, forget it. unacceptable. however, we have to do it because we have to the learn what the needs are. for instance, we have an enormous shortage in the nation in terms of, we talked about data analytics, cybersecurity, you and i discussed that. >> absolutely. >> computer science. can we create new pipelines for computer science. we sat down with companies in seattle. amazon and others. and then we took students who finished a b.s. degree and they give them long-term co-ops, those internships. and we gave them a masters in computer science over the period
where they are there. now, those students are coming with a background in physics, a background in math, a background in economics. but they are retooling. for us we have to relearn. so a masters in x doesn't require a b.a. in the same field. so it's a learning process for higher education. i agree with you, wes. we have the best educational system in the nation. because we have it, we cannot be complacent. >> i think there is another dimension to this, too, that goes to the heart of the pace of the technology and the pace of business growth that we all expect to see and want to the see as we go forward. and that's around innovation and the way we approach that from an educational perspective. long gone are the days when innovation was the product of single individuals. most enterprises today, i think this occurs in universities as
well, innovation is the products of groups of people, groups of people coming together. one thing that universities have been doing well for some period of time is working hard to develop that teamwork approach as students come through university. but as we see folks progress into business and into the work environment, oftentimes the discipline within which they were educated becomes the stove pipe within which they want to work. i know in our company and many companies like ours innovation is occurring most quickly at the boundaries of the disciplines. not solely within the disciplines. as we move forward, that's only going to accelerate. what better place for people to learn that opportunity and learn how to engage in that way than in universities? in fact, universities are leading the way in many respects in the way they do research but
bringing with that the way they teach and the way they engage in even the undergraduate level in the innovative ecosystem that needs to get created both within universities and companies. i think it's another opportunity still before us. >> i agree. my colleagues talked about the importance of fundamental research. and we all believe in that. there is also an additional aspect we have to be aware of. when we look at research in higher education, the most important factor in this research is the doctoral student. the people who are going for a ph.d. now, you know how we evaluate the programs, the ph.d. programs in higher education, by the number of ph.d. students placed in research universities. so if i place one of my ph.d. students at your company -- >> i like it.
>> you like it, but it's not you as plus, which is insane. so we need to start thinking beyond that. we also need to -- there are things -- all the innovation as you said is happening at the intersection. the intersection of not only disciplines but the intersection of what is happening in universities and what is happening in tech companies like yours. so why don't we start thinking about what we call experiential ph.d. programs, where we have co-directors? >> yes. >> you have first rate researchers. we have first rate researchers that can come together. co-direct. let me go a step further. how many universities have companies that have labs embedded in those universities? very few. we don't have good protocols for that. we can do it. so those partnerships that we
are talking about excite us a lot. but also at the same time we need to start doing more in order to be comfortable with each other. >> we do. >> it is is not enough to talk about the need for partnerships. we need to find a way to make it the default case. whereas now it is the exception. i want to ask you about something else. you came to northeastern. you talked to the students, you talked to the faculty, you talked to the staff, the community. you spent ten minutes talking about diversity and inclusion. >> absolutely. >> as something, as a dimension that is very important for you and for the workforce. tell us why. >> it is certainly something we have seen in action in our company. if you think about the work that we do, we are a company of 65,000 people. about half of our employees are degreed scientists, engineers, mathematicians, technologists of one form or another.
the language is innovation, change and how do you look at problems through different lenses. we do best and we measure this. we can see it in our company. we do best when our teams are diverse, when our teams are operating in a very inclusive environment, where all the ideas are freely put on the table. and when there's a high regard not only for all the individuals on a personal basis but a high regard for the way in which everyone can work together and get things done. this is not theoretical for us. this is tangible. it is a powerful outcome for us. so there is a strong, strong focus within our company to not only talk about this from the top levels of the organization. we measure it. we measure it across our enterprise, and we see the tangible benefits from it. so i'm a very strong propennant for the benefit, the business benefit of really working to make sure that we're doing the right things on diversity and inclusion.
and when it comes to recruiting the graduates, as we were saying, are incredibly smart. and we find that they tend to look for environments that are for more inclusive that give them the comfort that they're going to be able to put on the table their ideas, their views, and to be who they are. >> that's another aspect of the partnerships that we didn't discuss yet. the pipeline is not sufficient. we have to work together to increase this pipeline in k-12 by looking also at community colleges. by looking at historically black colleges and putting partnerships together. we haven't done enough of that. so this mandate is going to force us in higher education and in industry to work together to increase this pipeline. >> absolutely. >> this is something that is very exciting. frankly it hasn't been done enough yet. we have examples.
here and there, but that's an opportunity. now, you and i discussed cultural agility. we need people who are culturally agile, who are at east not only with different cultures in the united states but also on a global scale. how do you look at that? >> i see just a as i talked about, diversity. from our perspective, understanding a more global view and being comfortable operating around the globe is a key part of the success of any modern enterprise. and you might say, well, a defense company isn't that primarily domestic focus? no. most of the companies in our industry are global companies of necessity. we operate with our allies around the globe. when you're talking about national security, that's a very sovereign local perspective oftentimes. really being comfortable operating on a global basis is critical. that's why universities that
bring that view i think have a leg up. the universities that really encourage their students to engage in that more global perspective and to learn to have some meaningful learning in that regard. whether it's the intersections with students from other countries on the campus or the international opportunities that are afforded to them. it's a great thing about your co-op program, that you afford your co-op students opportunities not just in the u.s. but around the globe. and i think it really does produce graduates who step into the workforce with a broader perspective than they might otherwise have. >> you know, from this perspective, we have over 5 million students in colleges and universities. if i tell you how many go overseas, have an overseas experience is less than 500,000. so we have a deficit and we have an opportunity there. we have an opportunity to give our students -- and actually we have an obligation to give our students a global experience,
because we are working and competing on a global level. >> absolutely we are. >> as a matter of fact, let me give you the example of g.e. if by the age of 26 you don't have global experience, it is going to be very difficult for you to grow. so imagine the situation where they are coming -- they finish by the age of 24. you know, they have a masters or more. then they go to work. they don't have a global experience. so what happens? that's a deficit. we need to work on that. that's why wes and i are very excited about being together and building those partnerships and those opportunities. let me go to something. i want to address one more item. when we look at talents, one of the issues is obviously talent retention. how do you build talent retention? >> so it is a challenge. in today's environment where
there are skills shortages, as we said earlier, in particular fields, whether we're talking about those who are great computer scientists or data analysts or if you're talking in the world of artificial intelligence, a whole variety of fields, there's extreme competition. and what we have found, i can speak broadly for our industry, is that companies that are able to connect the mission of the enterprise to the work that the employees are doing are far more successful than others where it is a job. clearly in our space, national security, global security is a mission that appeals to many. we generally find if we can keep our new hires the first few years, they tend to the stay with us for a career. sometimes staying with us means staying in our industry. people move around within the industry, and that's fine. but it is that deep connection to a view that what you're doing is meaningful. and we find in interviewing on
campus that students really want to understand that as much as they do the particulars of the job that you might be speaking to them about. they also are looking for companies that have a view of their corporate responsibility. and i enjoy getting out and interviewing students on campus and have been pleasantly surprised by the number of students who have actually looked to see do you have a corporate social responsibility report and what does it say. that's just a broader view many young people are bringing to their career decisions than at the time i graduated from college. >> there is another dimension -- i agree 100% with what you said. when you talk to the students, clearly, there is a need for that. another dimensions, is the company investing in me, because i know i have to invest in the company. that's where the lifelong learning is important. we work with ibm.
we work with ibm here, in india, china, et cetera, to train their executives. what do they see? why are they doing it? it grows fidelity to the place. retention increases. you see, we are now in a situation where higher education has an enormous opportunity to move into lifelong learning. but once we move into lifelong learning, we have to do it with you. we cannot be oblivious of reality. we have been oblivious of reality because we have been so good. we can't afford to remain. oblivious, and that's our opportunity. last word for you, sir. >> business, step up. we have a responsibility to higher education. we need to see we are part of the solution. we can no longer stand on the sidelines and criticize the outcomes. we have a responsibility to take a role in creating the products we need to make sure our economy is going to be successful.
>> great. thank you very much. thank you. thank you, wes. >> america's most precious resource is its people. they are the risk takers, entrepreneurs, and innovators. how can we best encourage and unleash this true american strength in order to grow the economy and create new products, services, industries, and jobs? ladies and gentlemen, please welcome founder and partner revolution llc and founder and chief executive officer america online, mr. steve case. president of carnegie mellon university, subra suresh and chairman and ceo of nanomech, mr. jim phillips. >> well, hello. good afternoon. we're the last guys. >> thanks for hanging in there. >> thanks for hanging in there for us. we're going to be talking about entrepreneurs and i've certainly
got entrepreneurs here and two very distinguished panelists. obviously sitting at the end, this guy is best known for the careers of tom hanks and meg ryan. and "you've got mail." and he founded a company called aol that did actually real well. this man has been the former president of the national science foundation and did a phenomenal job. obviously, everybody knows that. now the president of carnegie mellon. we have one of the top people in i.t. in history with one of the top material scientists in the world. so this is going to be a lot of fun. i want to get it started. this is a great time to be alive. it is a great time to be here with you. we're in a very unusual time. everybody remembers when the patent officer in the turn of the century, the guy that said, everything that's going to be invented has been invented. might as well close the patent office. in the '70s, what most people don't know, the guy run the
patent office at that time said more will be invented in the next 100 years than in the history of mankind. now everybody says more will be invented in the next five years than in the history of mankind. we have been hearing that all day, because basically all this is caused by the inventions in our lifetime and the last four years of four things. the chip, software, storage, and internet. and then all day long we've got to hear about all the incredible new things coming at us as full speed, like a.i., robots, nan otechnology, big data, genomics, 3d printing, avatar intelligence agents and things like that. a lot of things that may at the end of the day even capture jobs. so my first question is a really tough one at the end of the day as we sum up a few things and go down a different path, i want to
ask the distinguished panelists here with me, are humans inventing themselves out of work? >> so i think the answer to the question is going to depend on whether the kinds of jobs that are being created with a.i. and machine learning and big data, et cetera, when they are replaced by machines, are they going to be -- are there going to be newer jobs for people to create new robots, servicing the robots, writing software, and how many of those new jobs will be created vis-a-vis the number of jobs we lose. those are going to be very different kinds of jobs. and i think that's going to be the question. the world economic forum is right in the middle of a number of future councils. looking at 2020 near-term, 2030
midterm and 2050 as a long-term, what kind of displacements will take. i think another way to look at this would be slightly different question than this other than the number of jobs, which is only a crystal ball at this point. with all the technology that we have and if you believe in the so-called what we are supposed to be in the middle of the early stages of the fourth industrial revolution, which by definition is the convergence of the cyber world, the physical world, and the biological world. what are going to be the consequences of this compared to all the innovations that we created in the 20th century. in 2000, the national academy of engineering came up with a report on the 20 greatest engineering achievements of the 20th century. three years later nae published the 14 grand challenges of the 21st century. if you put them side by side,
you can't help but wonder why some of the grand challenges of the 21st century are a direct consequence of the greatest achievements of the 20th century. containing -- securing cyberspace, containing nuclear terror, et cetera, et cetera. every major innovation we create, there are intended benefits, unintended consequences and willful abuse of technology. so the question would be, with things like artificial intelligence and machine learning and robotics, et cetera, how do we address the human condition in concert with the development of the technology. some would argue that the reason for the 14 grand challenges of the 21st century from the 20 greatest achievements of the 20th century was because we did not pay attention to the
intersection of the technology with the human condition. so i think one of the things we may want to look at is what is it that we did not do in the last century we need to do in this century with respect to this new technology that will avoid the problems that we created. >> i agree with that. i just want to add a couple of things. first, it's inevitable the new technologies will destroy some jobs. whether it be a.i. or driverless cars or what have you. the challenge is how do you balance that with pushing new ideas forward to create new jobs. 200 years ago, over 90% of us work on farms, now 2%. 88% didn't lose their jobs. we kind of went from agriculture revolution to the industrial revolution to the digital revolution, which created new jobs. how do we continue to create new jobs? i don't believe we'll be
successful in doing that. i don't believe we'll have a competitive nation. i don't believe we are the most innovative entrepreneurial nation if we continue what we are doing, which is basically only investing and backing a few people in a few places. last year, 78% of venture capital went to three states, california, new york, and massachusetts. if you look at the states that donald trump won, 30 states, add them up, all 30 went to three states, 10%. so when people felt like they were left behind, they have been left behind and left out. the job creators often come, kaufman says the majority of jobs comes from high growth startups. we're only investing in a few places, we're not going to have an evenly dispersed innovation economy. we're not going to have a lot of shots on goal. some will surprise us and not just focus on tech partnership but other things like under armour in baltimore, chipotle in denver. all kinds of companies have broken through. we need to level the playing
field so everybody everywhere has a shot at the american dream. that's the best way to maximize the odds that we are creating more new jobs than we're destroying. it's not just about place, by the way, but people. last year 90% of venture capital went to men. 10% went to women. 1% went to african-americans. 1% went to latinos. so we just have to move forward and try to make sure we are supporting entrepreneurs with ideas in a lot of different sectors. not just tech sectors. a lot of different sectors. a lot of different places. and that will i think maximize the odds of getting this right. and also in the process lift up some of the communities that are struggling. that are feeling kind of left behind. >> steve, stick with you. you have this new book that is a new york best seller, the third wave. that captured a little bit of it. so are we doing the right things to get the technology to the entrepreneurs, or is there just a gross shortage like we have
heard in here before the council of competitiveness of entrepreneurs. maybe a third question to add to that, since you're very involved in this, can you teach entrepreneurs? can you create entrepreneurs? there seems to be an abundance of technology right now. >> i think there's a lot of ideas. out there. but opportunity has not been broadly dispersed. it goes back to leveling the playing field. it took me a lot of years to get around to writing a book. i was 58. i realized working last year, including doing some of this, rise of the cities, pittsburgh understanding what's happening and startup communities. something fundamentally different was happening, innovation, entrepreneurship, technology, internet was shifting. it took me a while to figure it out. the basic thesis, the first was building the internet, getting
everybody connected. when we started aol 31 years ago, only 3% of people were online, and they were online one hour a week. we had to build the on ramps. a lot of companies participate. in the beginning of that in the '80s, nobody knew about the internet or frankly cared about it. the end of that first wave in 2000, everybody was connected and couldn't live without it. that set the stage for the second wave, building software apps and services on top of the internet. so facebook and twitter and snapchat. basically this app economy, mostly the first wave pcs. the second waves shifted to smartphones. basically about software, viral adoption of software. what is happening with a third wave which is now beginning to accelerate is integrating the internet in seamless and pervasive, sometimes even invisible ways throughout our lives and change how we think about health care and learning and food and moving around and energy and other kinds of things.
these sectors change a little bit in the first wave, a little bit more in the second wave. not that much. but it will change a lot in the third wave. that will happen in different places than most people think. it will require a different mind-set for both entrepreneurs and ceos of large companies. partnerships are going to become much more important. it's going to require much more engagement with governments because these are regulated sectors so policy will become more important. and these are hard problems. perseverance is important. i talk about the three ps. it will be much more important. partnerships were not that big a deal in the second wave. facebook didn't need partners. policy wasn't important in the second wave. until you got big and had this global platform, it wasn't that big a factor. perseverance, facebook and snapchat were overnight successes. but i think it's going to shift. big companies partnering with small companies will be a defining characteristic of the third wave.
the folks on small company and big companies that get it right will rise up, which is not saying silicon valley will fall. it is perfectly positioned to do well. we will see the rest rise, we will see innovation more dispersed across the country, and right now, we have too many eggs in a few baskets, and it's risky. >> that leads us into corporate, private, public relationships and everything. but right now we have an incredible country with obviously the best laboratories, the best universities in the world. that leads us into as far as entrepreneurship tech transfer commercialization. you and i had a chance, subra, to testify before congress four or five years ago. you weren't a university president. now you are. and you've got one of the challenges is to do the tech transfer, commercialization, and what we're beginning to see come out of carnegie mellon is unique
models of tech transfer commercialization, including one with uber and several others. can you speak to us a little bit about that. and is that going to be something really good, are the universities going to begin to adopt new models and see more tech transfers commercialization of those great ideas? >> so maybe i'll start with a personal data point. i was a young -- when i started my academic career i was a young assistant professor at an ivy league school for ten years. during those ten years, i published quite a bit. during those ten years, i did not have a single patent. the next ten years, after the first ten years, i moved out of the university, a well-known university. during those ten years, i had 21 patents. many were licensed. there was a spin out country that came out of it. i wasn't any different. i wasn't any smarter. i had more opportunities available to me. the scientific work did not change. it's just is the opportunities that were available to me were really different. at carnegie mellon, for example,
about 10 years ago there was a change in policy to encourage faculty to publish or at least disclose inventions. internally, we call it 5% and go in peace. within two years, it led to a fourfold increase in the number of disclosures. brookings institution recently talked about case studies of why some cities that went through a serious economic decline were able to come up, when other cities suffered a similar fate could not reinvent themselves, they chose pittsburgh as an example of a city. and they attributed one factor, this is according to brookings institution. bruce katz did a study on this. and the factor they said was if major research universities
exist in a city, they have an opportunity to contribute to the economic revival of the city. in the skcase of pittsburgh, th attributed this to carnegie mellon and the university of pittsburgh. those are examples just in the last seven, eight years google set up shop in pittsburgh. their employee number one was a professor of computer science, who went and started this operation. now it is is one of the largest revenue makers for google anywhere in the world. and now they have several hundred employees. they are tripling the footprint in pittsburgh. we actually got this faculty member who spent ten years at google back. he's my dean of computer science. in fact, i joked to senior executives at google that the only reason he's coming back to the university is because we can pay him more than google can. so i think it's a two-way process. same with companies like microsoft, uber, and others. i think it's a brain circulation
of a different kind. rather than losing faculty members from our university to another university, now we lose them to industry. >> this is going to both of you. along the lines you're talking about, we hear a lot about the immigration issue. i know in my company, all of my scientists are immigrants. it's been really tough with the visa program, everything else, but talk about that a little bit, steve. you have a revolution, you're investing in a lot of companies. how serious of an issue is it? is there a way to get is fixed quick, so we don't send away our einsteins and werner von brauns. one year after getting their college degree, which we pretty well subsidized. >> it's a perfect example of rise to rest example. we put data together a couple years ago. the companies formed there, partly because of the expertise carnegie mellon has and the technologies is really quite impressive. and the fact that uber, one of
the most iconic silicon valley companies is kind of betting their future on pittsburgh. that's the center of gravity. for their autonomous vehicle operation. that's telling. as i traveled in a couple dozen cities in the last year, that story is the case everywhere. my favorite example is a company called magic leap in the mixed reality, augmented reality, virtual reality space. raised $1.4 billion of capital from google in silicon valley, from ali baba in china. where are they located? they aren't in boston, new york, san francisco. they're in fort lauderdale, florida. you're starting to see this. it will accelerate over the next decade. to your question, i'm very concerned about this. i worked on some of these issues and president obama asked me to be on the jobs council that jeff shared and i led the effort around innovation, entrepreneurship. we came up with a number of policies. some moved forward. access to capital issues
including jobs act, funding, on ramps for ipos. the number one recommendation is taking steps to win a global battle for talent. and i testified in favor of the senate immigration bill. sadly, it didn't get moved forward. it is obviously not going to move forward in that current construct. we have to the figure out some way to move some components forward. it's not just the h-1b, things like the startup visa. the one example i'll leave you with, somebody graduated from wharton, started a company, started to show some momentum. but he couldn't extend his visa, so he's forced to leave. he went home. he happened to be from india. and that company now has 5,000 employees in india. it is worth $5 billion. and he wanted to stay here. and i hear those stories every single day. i think we need him. we heard this today. focus on new ways to think about
k-12 education, encouraging people to be more creative. that needs to happen, but we need to win this battle. i remind people in washington, d.c., it's not just a problem we need to solve. it's an opportunity we need to seize. >> obviously you have run into this many times. we're running a little bit fast on time. >> so let me give an economic argument on immigration. of course i'm biased because i came with a one-way ticket and half a suitcase. >> thanks for staying. >> nearly 40 years ago. >> where did you hide out? >> i was in ames, iowa. here is the economic argument i would like to give. which is often overlooked in our conversation on immigration. studies show if a child is born today in the u.s., it costs the parents on average to raise the child from birth to age 22 through college approximately
half a million u.s. dollars. $400,000 to $500,000. private school, public school, doesn't matter. that's the average, half a million a child. let's say 100,000 students who come here, graduate students come here to get an advanced degree. if we make it easier for them to stay here, some other taxpayer has already paid half a million dollars each to those 100,000 students. these are the best and the brightest. if we can attract them to keep them here, 100,000 times half a million dollars is $50 billion, that's seven times the annual budget of the national science foundation. so in the second half of the 20th century, the u.s. has been the undisputed innovation leader because all other countries in the world have been subsidizing our innovation ecosystem, much more than we pay through the u.s. taxpayer money to the national science foundation.
there is no substitute for cultivating domestic talent. but if you can cherry pick, pick and choose anyone you want from anywhere in the world to come here, you can beat anybody in innovation. that's what we have been doing. if we lose that, we will lose the game. last point, let's not forget it, this year, six americans won the nobel prize. all six got their first degree abroad, all six of them. so that is my response to the immigration question. >> that is pretty convincing for sure. >> i just want to say one thing. we both obviously are passionate about the issue. i don't think we all collectively have done a good job framing the issue. i think this election is a good example. as i said earlier, a lot of people in a lot of places feel left out because they have been left out and left behind. part of the reason globalization, digitalization for them they view as a net negative not a net positive. immigration they view as a net negative because it feels like people are coming and taking their jobs. we have to make the case that if
entrepreneur startups create jobs and we have more people coming here, some will end up being the big companies of tomorrow. 40% of fortune 500 companies, as you know, had at least one immigrant founder. so we have to tell that story. this is about getting people who will help create the jobs and help lift up the communities, but then we need to spread the wealth so it does in fact reach more people in more places. the companies are in pittsburgh, des moines, atlanta. not just san francisco, new york, and boston. >> all across the united states. >> this is titled the next wave of american entrepreneurs and everything. so you two will have an incredible perspective on this. it will probably be different. but what do you see? we all grew up through the digital revolution, digital rearchitecting of everything, now we have material science being disruptive. what do you see as the next big targets of disruption? if you want to get down what we went through with the kodaks of the world or encyclopedia britannica. overnight.
do you see -- are we still on that kind of run and that kind of speed of disruption, innovate or die, and are there real likely targets out there? >> i would argue, in fact, all this week as you know, "the wall street journal" is has been running a series on innovation. and they interviewed a number of different people. i spent some time with the reporter for "the wall street journal" just a few weeks ago looking at different perspectives. i think the pace of innovation has never been stronger. the kind of students we get today at the universities and colleges, these students are much more entrepreneurial and they want to -- not only entrepreneurial and many more opportunities than a generation ago. equally, they are eager to connect that entrepreneurial spirit with societal impact in ways in which their parents and
grandparents did not do, which is wonderful for entrepreneurship. part of our challenge as university leaders is to make sure we are not just training somebody in how to solve an equation or code a program or do an experiment, but how do adapt and think differently in a complex situation. i think adopting the education, teaching how to learn, is more important than teaching a particular subject. >> very good. >> you mentioned kodak, the story there is worth digging into. the general view is kodak was caught sleeping, the digital photography came out of nowhere. obviously went bankrupt while they were trying to reposition. actually what happened, kodak engineers invented digital photography. it was invented at kodak. but the corporate leaders were not leaning in the future. they were focused on protecting what was there. the paper business was pretty profitable. it is a reminder to all of us,
you have to focus on where things are going, the best way to do that is to partner with entrepreneur, not to try to do everything in-house. you have a lot of smart people working for you. guess what, smart people work somewhere else. how do you create a network around your company so you're not left behind. you are part of the future, and you're playing offense, not defense. clearly, the companies get larger, i saw this with aol, certainly after time-warner, we did shift from playing offense playing defense. you can't do that. i think figuring out how to continue to be nimble and flexible, more agile in a world that's speeding up and how to focus on where things are going and not just talk about it, but figure out how to execute will be one of the big challenges in the third wave, and i think the answer gets back to partnerships. the companies that do partnership will succeed. the ones that try to go it alone will be left behind. >> does that mean small companies that make up about 95% of the new jobs need to partner? is that what you're saying to that extent? >> yes, different, though.
>> the '90s are gone, where you up and sell and all that, and so -- >> i know you ran that play a bunch of times. >> yeah, you did too. >> because of the nature of the sectors. >> it worked out for both of us. >> take health care for example, if you want to revolutionize health care, of course software will be part of it, but it is not dropping an app in the app store. you have to work with doctors and hospitals and health plans. that's going to require partnerships. if you want to do something about re-thinking learning, you have to work with teachers or professors or partner with carnegie melon. so this mentality is all about the app, the software, it has to move into this world where it is about integrating important aspects of your life and partnering with some of the players in that. unless you do that as a small company you may not get traction. unless you do it as a big company, you may not stay relevant. both incentive for this dance. >> you know, we've got a minute left. this is a great group here. so i wanted to open it up for just a couple of questions while we are here. anybody?
and i can't see. yes, sir, in the back. [ inaudible question ] >> -- looking at those types apprenticeship programs and re-establishing those, and providing that as a foundation for doing innovation, because unless you're working, you're not going to create a better way to do that thing unless you have the foundation. >> i agree. i think that would be a great way for larger companies again, how do you figure out a way to be a magnet for people with ideas, young people in with
different perspectives. there are a bunch of different ways to do that, as i said earlier. one way would be apprenticeships, companies are trying that and that will accelerate in the next decade. >> we see that all the time with our starting in the freshman year, the number of companies that come to attract students to go work for them. in fact, companies like pricewaterhouse cooper is hiring civil engineers. i mean, connections that you would not have thought of just a few years ago as trainees. and this also gives companies an opportunity to choose which students they want to give offers to when they graduate, try them out in different locations. and in fact, some of the students, at the end of the freshman year in our -- in some of our programs, they have multiple offers. right at the end of the freshman year. there are lots of opportunities now. on a global scale as well. companies from around the world, coming here attracting students.
>> so before we go, maybe as a wrap-up, just what would you like to say or recommend to entrepreneurs. there's thousands, millions perhaps out there. you both have incredible experience in this area. how would you, just a minute, say? >> i'll be very brief. innovation is a contact sport. and engage in the contact sport and come in contact with as many people, like steve, who have succeeded, and as many people you can find who have failed, but tried very hard. >> two things. building on that entrepreneurship is a team sport. how do you assemble the right team of people aspect is critical. but recognize, i said earlier in this third wave, the game is changing. and the rules that worked or the playbook that worked in the second wave will not work or will not work as well in the third wave. so things like partnership really internally are hard. it's hard to structure win-win partnerships. but it's important.
policy is hard and frustrating. of course you don't want to deal with government regulators, of course that will slow you down, but we're going to have some regulations about medical device safety and drones in the sky and driverless cars on the road. we're just going to. so understanding that and leaning into that is important. perseverance is also important. the last one, as i said several times is be more open minded about place. fifty years ago if you wanted to be in the entertainment business you had to go to hollywood. that's not true anymore. 50 years ago, if you wanted to be in the financial service, you had to go to new york, be on wall street. that's not true anymore. you've got all kinds of -- a cottage industries around creation of music, all around the country, all around the world. people are running hedge funds and mutual funds from all around the country, all around the world. we're seeing entrepreneurship regionalize and globalize and trying to figure out where you should start the company, maybe because a partner is there. something around some of the work that carnegie mellon and pittsburgh does around building things and robotics are the
things that other places, you care about agriculture technology, st. louis, or omaha or louisville might be the place to do it. so recognize the opportunity is changing, but the opportunities are unbelievable. these are most important things in terms of our lives, some of the biggest sector of our economy, so it's game on, but you have to adopt this different mi mindset. >> well, thanks. we definitely had two great panelists, and thank you for being here, and thank you, council, and thank you for putting this on. >> happy 30th anniversary. >> thank you. >> ladies and gentlemen, please welcome back the president and ceo of the u.s. council on competitiveness, the honorable deborah wince-smith. >> wow, what a great day. thank you all for being with us
on behalf of the council's executive committee, i want to formally thank all the council members, our speakers, our sponsors, the fantastic council staff that have worked very, very hard to put on our gala dinner last night and this very special national competitive forum, as we celebrate our 30th anniversary, but importantly, begin today the journey started today to craft the next chapter in the council's journey to make america more prosperous and competitive. i think we heard throughout the day, there is no crystal ball on where our country is going to be in the years ahead. but a few powerful themes really emerged through the discussions. i just thought i would capture a few that we talked a lot about change, but we also talked about continuity. we talked about the collision
and convergence of the scientific and technological revolutions and how they'll transform our lives and create new products and services and tremendous value. we talked a lot about connecting, collaborating, competing and coalescing around big initiatives to do big, important things for our country. we talked about how to co-create, construct and capture the value of our innovation capacity in america. and very importantly, all of our speakers in one way or the other really came down to addressing this challenge of how we can create together a new connected community of caring concerned citizens who are all part of the competitiveness journey. for inclusive prosperity. so again, i want to thank all of you for being with us. our clarion call for
competitiveness will be the new strategy for the new president-elect and administration in congress. we urge you to take it back to your states and cities and regions, and promulgate this and very much welcome you to be part of the next chapter in our competitiveness journey. thank you so much for being with us. [ applause ] while congress is on break this week, we're taking the opportunity to show you american history tv programs normally seen only on weekends. we continue tonight with a look at what happened after the end of world war ii. starting at 8:00 eastern with the fate of nazi and japanese
war criminals after the war. that's followed by how the war changed the u.s. and the rest of the world. american history tv primetime, all this week at 8:00 p.m. eastern. sunday, in depth will feature a live discussion on the presidency of barack obama. we're taking your phone calls, tweets, and e-mails in the program. our panel includes april ryan, white house correspondent, and author of the presidency in black and white. my up close view of three presidents and race in america. princeton university professor eddie glaude, how race still enslaved the american soul, and pulitzer prize winning journalist, david maraniss. watch in depth live from noon to 3:00 p.m. eastern on sunday on book tv on c-span2.
the presidential inauguration of donald trump is friday, january 20th. c-span will have live coverage of all the day's events and ceremonies. watch live on c-span and c-span.org and listen live on the free c-span radio app. >> senate environment and public works committee chair james inhofe recently spoke at a conference on expected environment and energy policy under the trump administration. after senator inhofe's remarks, corben robertson, chair and ceo of an oil and gas firm joins the conversation. this is just under an hour.