The Conference Board M agazine of Ideas and O pinion

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Outlook 2004:Good Times, but...

Death and a Salesman

The Future of Practically Everything

Unemployed?Unemployed?Will We All Be Will We All Be

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Unemployed?Unemployed?Will We All Be Will We All Be

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Looking ahead to our placein the next economy.

When we hear aboutmanufacturing jobsmoving overseas—whether in steel,cotton, textiles, orBuicks—it doesn’t

sting all that much anymore, unless, ofcourse, a family member is among thepink-slipped unlucky. Somehow it seemsinevitable—progress, even: The UnitedStates is continuing its forward movement,leaving behind the remnants of the Indus-trial Age and bringing its diverse work-force into the Information Age, ready tolead the way.

But news of software-programmingand radiology positions being out-sourced to Romania and India has amore visceral impact. Few knowledgeworkers—and aren’t we all supposed tobe knowledge workers now?—foresawtheir livelihoods being jeopardized bythe same free-market principles thathave devastated U.S. manufacturing.

Yet technology and toppling tradebarriers have left white-collar jobs asvulnerable to overseas migration asthose in blue-collar industries. And U.S.workers may not even be the first choiceto run call centers or manage the infor-mation that is the new economy’s life-blood: Americans are expensive, whatwith 401(k)s, ergonomics requirements,health care, vacation days, and life in-surance, and most have little educationalor training advantage over their foreigncounterparts.

“I’m nervous,” says the ordinarilybuoyant management guru Tom Peters.“I don’t think there’s any job that’s saferight now.”

“Is the anxiety justified? Abso-lutely,” says Dow Chemical ideationleader Andy Hines. “We’re facing a realchallenge.”

After all, notes USC managementprofessor Ian Mitroff, “if finance andengineering-design jobs can be moved

offshore, what can’t be moved?”If you find the trend disquieting in

principle, check out the numbers: Arecent U.C. Berkeley study estimatedthat some 14 million U.S. white-collarjobs—11 percent of all jobs—are atrisk of being outsourced, anytime em-ployers want to make the move. That’ssignificantly higher than the widelyreported Forrester Research forecastof 3.3 million jobs lost over the next15 years, not to mention the 2.5 millionmanufacturing jobs lost in the last threeyears. And who can blame U.S. compa-nies for looking east for lower personnelcosts? The Berkeley researchers, AshokDeo Bardhan and Cynthia A. Kroll, notethat Indian telephone operators earnunder $1 an hour, payroll clerks just $2,paralegals $8 or less.

The baby boomers’ retirement willstave off any true white-collar crisis fora few years—employers will be scram-bling for warm bodies, and anyone whofits that description will probably get by.But for far-thinking organizations, thecoming demographic shift is another ar-gument for moving operations offshoreeven faster. In five or 10 or 20 years, willthere be any work for knowledge work-ers—or their supervisors—to do?

Of course, few forecast a future asbleak as all that—U.S. workers have sur-vived every previous disruption, majorand minor, and they’ll survive this one.It’s the disruption’s severity and dura-tion that are in question—and whethertop-tier workers will be able to maintaintheir position in the global economy.

Granted, not everything can be out-sourced. Despite improvements in video-conferencing and the ubiquity of cellphones, plenty of jobs—even white-collar jobs—require face-to-face contact.We haven’t—and won’t—become “anation of burger-flippers,”as Lee Iacoccaonce feared; the service economy hasn’ttrumped the information age. Whatever

MATTHEW BUDMAN is managing editor of Across the Board. He wrote “With Fresh Eyes” in the Nov/Dec 2003 issue.

By Matthew Budman

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the Internet’s reach, society can’t function without doc-tors, social workers, and police officers. The economywill continue to need trainers and researchers andeconomists and teachers and lawyers and editors—andexecutives to manage them all.

And there’s the not-unimportant fact that work willalways be here because here is where workers wantto be. The United States remains the world’s top desti-nation spot for both well-off emigrants and destituterefugees, all seeking a dynamic, vibrant society as wellas economic prosperity. Sure, the cost of living is farlower in the developing world, but America is wherepeople want to come—and stay. It may be cheaper tostart a software-development firm in Ghana or the Phil-ippines, but how many U.S. entrepreneurs would gladlyrelocate their families from Ohio or Massachusetts?

So should we be worried about our prospects adecade or two down the line? What will it take tostave off downward mobility—individual and collec-tive—and decline both economic and social? We askedsome thought leaders with their eyes on the future,including a few who proudly call themselves futurists,to peer at what’s ahead for American executives andknowledge workers.

Applaud the Job Exodus?

We already know what won’t work: protectionist ef-forts to keep jobs here. It hasn’t worked with manufac-turing—the latest example, George W. Bush’s clumsilyenacted and globally rejected steel tariffs, ended upcosting more jobs than they saved. And no program oftax-based carrots and sticks is likely to keep data-entryand accounting functions on these shores.

Anyway, creative destruction of jobs is hardly newsin any industrialized nation. Each economic era hasseen massive displacement of workers, of families, ofentire industries. No one called it retraining, but allthose cobblers and subsistence farmers and, yes, buggy-whip factories needed to transform into somethingelse—something unforeseen.

“The loss of manufacturing jobs is just another chap-ter of technological progress in our economy,” insistsChristopher Meyer, former director of the Center forBusiness Innovation, who says that the ongoing white-collar volatility, like economic upheavals before it, isabsolutely necessary. He sees the job exodus as “part ofa long-term trend of manufacturing jobs leaving thiseconomy—and we should applaud it.” A country ad-vances by replacing lower-level jobs: “That’s how eco-nomic growth happens—the new jobs have to havehigher value-added, higher productivity. It’s like when

automation replaced blue-collar jobs—we look at mostof the jobs it displaced as brutish and short: mining coal,or having your internal organs cooked by the infraredradiation from a ladle of steel. These adjustments willallow more people to do what they want to do, notwhat they have to do.”

Business thinker Stan Davis, Meyer’s frequent co-author, uses a pipeline metaphor to describe the pat-tern of job creation and motion. “I’m not concernedabout U.S. job losses so long as we’re feeding the frontend of the pipeline with growth and innovation,” hesays. “As each new innovation creates new jobs andnew sectors mature, those jobs migrate down the globalfood chain. The issue is, ‘Does the United States repre-sent the front end of the pipeline?’ It’s a question ofhow long we stay healthy and grow and innovate andcreate new sectors.”

And no matter how many call centers and program-mers head overseas, the United States has a head startin invention and innovation, according to Glen Hiem-stra, founder of Futurist.com: “Our biggest competitiveadvantage will remain creativity and innovative think-ing—as compared to routine churning out of informa-tion—because of the innovative history of the country,because of the cross-cultural mix that leads to fertilityof thinking,” he says.

U.S. companies and workers also benefit—thoughthey won’t do so forever—from ease and familiarity ofcommunication, language, and organization. FuturistWatts Wacker, CEO of FirstMatter LLC, points out thatno emphasis on efficiency will obviate the need forhuman contact—“You can’t Six Sigma relationships,”he says—or for unusually valuable personnel. “There

“The issue is,‘Does theUnited States represent thefront end of the pipeline?’”

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will always be a premium for people who are betterthan others.”

The question is whether U.S. workers will alwaysbe better than their foreign competitors. Meyer empha-sizes that workers must stress distinctiveness over supe-riority: “Either U.S. income will fall to the level of thosein other countries who have the same skills, or we haveto have different skills,” he says. “So what are those dif-ferent skills going to be?”

The effort to develop those different skills mustbe a priority for not just individuals but entire eco-nomic sectors, says Dow Chemical’s Andy Hines, whoalso chairs the Association of Professional Futurists.“Look at what’s happened to unions,” he points out.“They’ve had a very similar kind of challenge—in theircase, with physical labor migrating overseas—andthey’ve responded not by trying to improve what theybrought to the table but by staying static and tryingto hold on tight. When someone else can do the jobfor one-sixth the price, you’re going to lose no matterhow hard you fight. It’s a losing game, and knowledgeworkers can lose too—if they stay at the same skill levelas somebody in India.”

Staying Ahead of the Curve

Keeping U.S. workers on the cutting edge will requireefforts both individual and national. It won’t just happen.Hines calls it a national imperative: “If we stand still,there will be up-and-coming economies that will takethe things that we’re doing now,” he says.

Hiemstra cites “two critical things that we need to do”on a national scale. First: We must move quickly to bringa high-speed Internet connection “into every home andevery business location,” he says. “Other countries aremoving in that direction as a matter of national policy,through a mixture of public initiative and privatization.We ought to be looking at the Korean model, and atwhat’s happening with the telecommunications infra-structure in China and India, which are moving muchfaster than we are on a percentage basis. This ought to bea top national priority for us, and currently it’s seen onlyas something that would be nice—if the telecommuni-cations companies could make money doing it.

“Second,” he continues, “to maintain our innovationlead, we need to push for more people receiving ad-

vanced math, science, and technology education. Gradschools in those areas are dominated by foreign stu-dents. We’re just not generating enough people withthe kind of high-level technical knowledge to do theinnovation in the new technologies and in the realmsof innovation that are going to be dominant in the nextquarter-century.”

USC’s Ian Mitroff also sees education as key. “Wehaven’t done a good job of teaching critical thinkingand creative problem-solving,” he says. “People findcritical thinking difficult because it’s a radical switchfrom their 20 years of education in solving well-struc-tured problems. We’ve produced a nation of certaintyjunkies, where if you can’t define a problem with preci-sion and certainty, people go crazy. Well, welcometo the real world. The game has changed. Problemschange as fast as you’re working on them.” Indeed, theychange because you’re working on them—or not work-ing on them.

For Corporate America as a whole, if CEOs neededany more incentive to pay more attention to long-rangeplanning and encourage entrepreneurial thinking with-in organizations, the offshoring trend should provide aconvincing kick in the pants. “For most organizations,”Mitroff says, “most of the traditional management func-tions get in the way of innovation. That doesn’t meanthat a company shouldn’t have a CFO, but you haveto have a different kind of CFO—an interdiscipli-nary CFO.”

Hines argues that companies that want to stay vital—not to mention in business—must encourage creativethinking in the workforce as well as on an organiza-tional level. “It’s not just the jobs that are going over-seas—it’s the corporate functions,” he says. “If you’re

going up against a European-headquartered company,your only value-add is going to be being creative, inno-vative, and forward-looking.”

Keeping Up on Your Own

You’ve seen all those articles warning knowledgeworkers to upgrade their skills or get left behind? Timeto start photocopying them for your staff.

“Knowledge workers should be working to acquire

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“You have to have a different kind of CFO–

an interdisciplinary CFO.”

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more knowledge,” Hiemstra counsels. “You’ve got tokeep learning in new areas and improving your skillsas much as you can. You’ve got to keep asking yourself,‘What will I be learning in the next six months?’ Andyou need to look for opportunities to be more innova-tive in the settings you’re in.”

Both Meyer and Mitroff believe that tomorrow’s suc-cessful knowledge worker will be the one who cancope with an increasingly unstable world. “Don’t lookfor a job that’s well-defined, with a lot of work rules andspecifications,” Meyer says. “Look for jobs where yourtask is to make change rather than to continually deliverthe same thing—not to do but to innovate. Conceiveof your job as entrepreneurial.”

Mitroff insists that top workers must “be comfortablewith huge amounts of uncertainty. That’s part of the newskill set. They will have to learn how to solve ill-definedproblems, to retool and regear, to learn inter- and trans-disciplinary education, to make connections betweenproblems and issues. Everyone will have to learn sys-tems thinking, what the properties are of complex

systems and how that can be used as a problem-solvingskill. People are going to have to learn the art of prob-lem formulation. They’re going to have to learn howto question assumptions—in fact, a whole discipline forchallenging assumptions. They’re going to have to grap-ple with complex, fuzzy issues that are often in conflict,that are contradictory. It’s a totally different philoso-phy of inquiry.”

Tom Peters echoes Mitroff’s emphasis on uncertainty,in somewhat less academic language. “We have becomea nation of spoiled brats!” he exclaims. “America is notabout certainty. The fundamental Pilgrim-father mythmay be mostly nonsense, but that myth—which hasserved us quite well for over 300 years—is that Americais about taking chances and reinventing ourselves. Wehave become security junkies, and to hell with that.”

For Peters, white-collar workers who can demon-strate discrete, concrete achievement are most likely tobeat out their peers, domestic or foreign. Some, natu-rally, generate tangible results in the normal courseof their work: “I give a bunch of speeches—people like’em or don’t like ’em,” he says. “I write a bunch ofbooks—people like ’em or don’t like ’em. I write a bunch

of articles—people like ’em or don’t like ’em. Whatever.They’re stuff.” But most workers and executives areunaccustomed to thinking in those terms. “It’s far moredifficult if you are a purchasing manager, HR manager,or finance manager, even if you are at the $100,000-a-year level,” Peters says. If asked to provide evidenceof their accomplishments, “to some extent, the mostthat those people could say is, ‘I came to work everyday; I showed up; I did good work; the company is stillaround.’” Successful 21st-century career management—including planning for that career’s next phase—de-mands less passivity.

“Your responsibility is to be continually upscaling,”Hines says. “You need a work/life plan in which you’reconstantly raising your own bar. If you do that, you’ll al-ways be ahead of the outsourcing wave. It’s not as thougheverything stands still—there’s a demand for more ad-vanced activities, and if you’ve been keeping yourself inprofessional shape, you’ll go up the curve with it.” Heargues that, more than ever, it’s crucial for workers tonot leave their careers in their employers’ hands. “I havea responsibility to maintain my own skill level, and I can’tjust get stale in one place and hope I’ll be taken care of,because I won’t be. I’m not sure that most people havequite that level of personal responsibility yet.”

Top executives in particular, of course, face broaderissues than their own careers—and are, if anything, atgreater risk than front-line white-collar workers of losingtheir place in the next economy. If all the positions youused to supervise are 8,000 miles away, and your salary isnow thousands of times higher than theirs, you’re afford-able only if you can offer something truly extraordinary.

The futurists’ key advice: Expand your scope ofknowledge and vision. “Put your head up,” Hiemstraurges, “and start seeing what’s happening. I speak fre-quently to groups of executives in various industries,and I ask them, ‘How many know something aboutnanotechnology?’ The typical percentage is 5 to 10 per-cent who’ve even heard of it, which always floors me.Then I ask how many know what’s happening withglobal population, and even though it’s become a bignews item, almost no executives know about the im-pending decline in global population in significant partsof the world—the fact that Europe will see a populationdecline of 80 million people in the next 50 years. Sincepopulation and social trends are primary drivers of bus-iness, I’m always surprised that executives are barelyfamiliar with these things.”

Where Will the Jobs Come From?

As Watts Wacker puts it, the U.S. economy has evolved“from agricultural to manufacturing to social to informa-tion to mental.” But the consensus is that the transition

“We have become a nationof spoiled brats! America is not about certainty.”

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to the “mental”—a “Creative Age,” in the phrase of Car-negie Mellon professor Richard Florida—remains aways off. Hiemstra insists that “we’re still in the earlystages of the information age,” if you date the age fromthe emergence of the World Wide Web.

“I think we’re about two-thirds through the knowl-edge wave,” says Andy Hines, who’s excited about theprospects for the last third: “This is the part where it getsgood and interesting. It takes a really long time to in-stitutionalize and incorporate and get used to workingwith big innovations, like electricity and information.And now it’s so routine—such a part of everyday life—that we’re really figuring out how to use it.”

Hiemstra looks to biotech, energy, and nanotechnol-ogy for the next boom, and Davis agrees, calling biologythe “parent science” of the next economic era—one thatis bottom-up and rule-based rather than top-down andlaw-based, as physics is.

Wacker agrees and emphasizes business process aswell: “The information age has been about disinterme-diation; the next age will be about reintermediation,”he says. “It’s not that we don’t need middlemen—we justneed different kinds of middlemen, and that’s where thenew jobs will be.”

And Hines sees the next economic wave being drivenby sustainability—“the triple-bottom-line idea.” In the

next decade or two, “sustainability will be a driving forceof what we’re going to use this knowledge and innova-tion and creativity for.” The push for increased con-sciousness in issues of ethics, the environment, andeconomic justice will come from developing countries,NGOs, and knowledge workers themselves, he pre-dicts. “A growing number of those workers want to besocially responsible and environmentally responsible,and they haven’t been able to express that. The demandfor the triple bottom line, which used to be from thecrazy NGOs and the fringe, is going to come from us.

“At Dow Chemical,” Hines continues, “sustainabilityis a very important part of our company. The messagehas thoroughly permeated—of course, you can’t meas-ure how much everyone believes it, but you start to seethat this is what people really want to do. It’s sometimeshard in the business climate to act on what you believe,but I think we’re going to see more of it: Talented work-ers are going to go places that let them express whatthey want to express.”

But predictions of what the next economy will focuson, or what its “energy source” will be, or even what itsunofficial name will be, don’t—can’t—point definitivelyto the next job sector. The tech explosion came out ofnowhere and rescued the U.S. economy by boostingproductivity; will the next new sector do the same?We can only guess what it will be—or what impact itmay have. It’s not enough to study demographics andforecast that Generation Y, in its entirety, will be staffingnursing homes for retired boomers.

Peters is fast losing faith: “I’m unnerved by thisjobless recovery; I’m a lot less confident than I was18 months ago,” he says. “For 15 years, this was the pat-tern: We lost a manufacturing job to Mexico; we addeda service job in New York—or better yet, 1.5 servicejobs. I’m uncomfortable with that simplistic notion, nowthat we are losing high-paying jobs at an unprecedentedrate—especially those damn tech jobs that we got onlyfive years ago. It’s not clear to me where the replace-ment jobs will come from. I think we have every rightto be worried.”

The Next Organization

It’s practically a truism: The command-and-control erais dead; long live the age of empowerment and self-gov-erned teams and decentralization and knowledge-shar-ing. And yet charismatic CEOs are still superstars, and

Silver Lining

Does overseas migration of American knowledgejobs directly benefit the United States and itsworkers? Definitely: As countries such as India

and Ghana begin taking—and creating—high-value jobs, those countries will see an irresistible incentive toinvest more in education and other human-capital expenditures, and to de-emphasize repressive policiesand military escalation. And other nations will surely follow their example: If Romania can do it, why not us?That human-capital investment, Christopher Meyer points out, is “a prerequisite for sustained economicdevelopment.”

Of course, the United States, in its current antagonisticattitude, is more concerned with security than in othernations’ economic health—and the white-collar transferaids that goal as well. “High-value jobs give countries astake in free trade and orderly economic life, which is thebest anti-terror campaign that we could devise,” Meyersays, noting that in addition, exporting of opportunitytends to reduce disparities in personal income—a healthy outcome by any measure: “Within a society and across the globe, there may be no more divisive force thanincome inequality.” —M.B.

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plenty of old-style, top-down organizations are notonly hanging tough but thriving. Top executives aren’tthe only ones content with the status quo: “We still havea lot of workers, a large sector of the economy, whowant to spend their careers with one company, and whodon’t want to go anywhere—who have no intention ofgoing anywhere,” says Michele Bowman, senior VP ofGlobal Foresight Associates and a founding member ofthe Association of Professional Futurists.

So will every company be forced to change how itdoes business in the next decade or two? Of course not.Some don’t have to change and sure as hell don’t wantto. Others simply can’t face that degree of disruption.Plenty will make incremental changes, and only underduress. And many of all these holdouts will get alongjust fine in the next economy.

But the rest of you—start thinking about new systemsof thinking and organization. We mean it this time.

“For those whose business model currently is notthreatened the way it is in music and telecommunica-tions, I would not rest easy,” Davis says. “I would belooking to figure out how my current model is creaky.What are the business models for the future? We don’thave them yet. The dotcom bubble bursting is a perfectexample of the wrong answer for the right question—the question being, ‘What’s your business model?’ We’llfigure out the models within the next decade or so,and they’ll probably be bottom-up models.”

Those models may come from the unlikeliest ofsources. “On Sept. 11,” Peters points out, “a virtual or-ganization attacked a real organization, and at least in

the short term, the virtual organization made idiotsout of us.”

Mitroff invokes the same unsettling example. “AlQaeda has a 21st-century network node organization,and we’re fighting them with a 19th-century bureau-cracy,” he says. “The war on terrorism is not just a militarywar—it’s an organizational war. People have been edu-cated to solve problems that say, ‘Here I am—solve me,’and we don’t live in that world anymore. Sept. 11 alsoshowed that the oceans are no longer protective moats—we don’t have a magic bubble around this country.”The lesson applies to work as well: “The white-collarcrisis represents a radical transformation of the nature

of work. You now have to be able to make connectionsbetween your job—however limited it is—and an un-limited, unbounded world.”

Not everyone is apprehensive about participatingin an unbounded world. “Our borders keep expanding;this is really the second or third era of globalization,”Bowman says. “Twenty years from now, will we haveemployee ideologies that reflect industry-based per-spectives more than geographically based perspectives?

Absolutely.” She looks ahead to a world largely popu-lated by “electronic immigrants”—workers who takejobs in other countries without actually changing resi-dence, much less citizenship.

Hiemstra believes that spreading globalization willoccasion re-examinations of corporate social responsi-bility. “In the next quarter-century, more and more kindsof work will be eligible to be done anywhere in theworld by people who are skilled enough to do them,”he says. “Companies of all kinds will be forced to ask,‘What is our obligation to, commitment to, interest inthe community and our workers? What are we reallyhere for?’ I don’t know what the answers will be. Theymay say that the only things that matter are survivalof the company and shareholder value, or they’ll havea more complex answer. But companies will have tosit down and decide what is really important and whatthat means in terms of moving the work or not mov-ing the work.”

With American workers in mind, Peters is not espe-cially optimistic about what choices companies willmake—or even about the prospects for those compa-nies’ survival. “I think we’re entering a 50-, 60-, 70-,80-year period of instability, where I can well imaginethe great American economy being surpassed by theChinese or the Indians,” he says. “The certainty isgone—which suggests that workers don’t have thatlong to screw around. You’ve got to figure out what youhave to sell in a global economy—and then sell thehell out of it.” ♦

“What are the businessmodels for the future?

We don’t have them yet.”

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