Exact Change: Nick Donofrio Was Awarded the Industrial Research Institute Medal in 2010 for His Vision and Leadership in the Advancement of the Information Technology Industry and for His Work Defining Technical Strategy at IBM over More Than Two Decades

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Change is always around us; it's everywhere. But most people wait for change to happen and then react to it. In the old economy, this strategy might have been enough to succeed. But in this century, in this new economy, the playing field is flatter and faster. Success in any field--in industry, in education, in politics--now requires actively seeking out change and embracing it. Successful leaders in today's world know that change is always coming, so they don't wait for it. They look for it and capitalize on it.

So ask yourself, what is your attitude about change? Do you like it, hate it, embrace it, lead it, create it, or avoid it? If the United States is going to continue to lead in the new economy, we have to always be thinking about change.

Look at the historical shifts that have occurred in technology. Two hundred years ago, ninety-five percent of U.S. workers were farmers; in 2010, it's only one percent. But everybody is still eating, so what happened? We had to be more productive to feed a growing population, so the mass production of food became a self-fulfilling long-term trend. Job growth in the industrial sector has also reversed. Today, more people are provided with housing, clothing, and other essential goods for much less. That leaves services as the only growth sector left in developed nations. Don't misunderstand me. I'm not saying we shouldn't make things anymore, or that there's no value in agriculture. We have to keep making things; we need to keep growing food. But the value in those things may be--will be--somewhere else in the future. It may be in the service that delivers the food as complete, prepared meals, or in the business model that captures the product, transforms it, and directs it to the customer.

The U.S. economy is already more than fifty percent information driven and over sixty percent services. So this is where the future is as far as growth is concerned--in information and services. Manufacturing will continue, but the value in making things will be somewhere other than in the product itself. The value will be found in the service's value proposition or in the business model used to deliver the product. If the United States is to remain a world leader, we have to understand how value is migrating and how we can innovate to capture that value wherever it is.

The Growth Standard

Value is migrating because the world is changing radically, faster than we can keep up. Look at the stunning change in computational performance over the past century (Figure 1). The number of calculations per second that we can perform for a given cost has increased by 16 orders of magnitude in the last century. There isn't a single comparable example of this kind of exponential increase in productivity. From mechanical components to vacuum tubes to integrated circuits, the world has been hit by this continuously expanding wave of computing power. And this pace of change will continue into the future--there will be something new beyond semiconductors. Whatever the world of nanotechnology holds in store for us, there clearly is more, much more, to come.

The decrease in the cost of each calculation reflected in this curve is where the value has been captured and why this technological transformation has been so profound. It's what has driven the increased productivity that's pushed value from actual production to the services that accompany the product. We can do things faster and more efficiently than ever before. And it occurred because of change--because of people who embraced change and understood the game-changing power of invention, creation, and discovery.

The changes resulting from Kurzweil's curve have been shaping our economy for a long time, but the tipping point really came at the turn of the twenty-first century. At that point, the value that had historically been achieved by invention alone seemed harder to come by. Just taking stuff and throwing it against a wall to see what would stick didn't work anymore. …


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