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Smart Machines/Smart Careers: Where Are The Jobs in the Coming Sense & Respond Economy?
Sheridan Tatsuno, Westlake International Group : 16th April 2005

Peter Cochrane is the co-founder, business angel and consultant to ConceptLabs in London who has 38 years of experience in the telecom and IT industries. He graduated from Trent Polytechnic with a bachelors degree in electrical engineering and earned his masters and doctoral degrees in telecom systems at Essex University. Mr. Cochrane is a member of the New York Academy of Sciences and a fellow of the Royal Society of Arts. For more information, see: www.cochrane.org.uk and www.conceptlabs.net.

  1. 1. What is your assessment of RFID?
    RFID presents a solution to a multitude of problems. People tend to think of retail, but it spans everything from the gathering of raw materials to the logistics of shipping, the manfacturing, to the delivery to the store, and customer ownership and satisfaction. It will take out trillions of dollars of overhead out of all of those sectors, so there are tremendous potential gains. Moreover, it has serious implications for national and international security and some implications for civil liberties.

    It is also a motivating technology in terms of its impact on IT and telecom. It's best not to look at this technology in isolation. You have to think of what this technology will do when it arrives in the shopping mall, hotel, store, or anywhere.

    The chipset in your PC is the same chipset going into the electronic POS. When an RFID reader is put on that POS, it will upgrade an upgrade to broadband. Once you have broadband, Bluetooth, and WiFi, you can make a mobile phone call locally. Instead of making a phone call to AT&T, I'll make it to the POS using WiFi and VoIP and it will be cheap. The implications for all human behavior and activity are profound.

  2. Where are the major RFID opportunities during the next 5 years?
    Any major technology takes about 11 to 12 years to rollout, so the major rollouts in retail, such as Wal-Mart and Tesco in Europe, start with high-value items that might be stolen. It also involves keeping shelves full. Retailers are focused on at a truck, pallet, box and item level. For example, Marks & Spencer has an RFID tag for suits. RFID rollout will begin where it extremely simple and cheap.

    The first rollout was ID chips injected into animals. The second rollout is retail stores for specific items. Some rollouts are hard to do, such as Coca Cola putting RFID onto cans, but it is not easy because it is metal and RFID must be really cheap. Putting RFID onto a $300 man's suit is easy. Putting it onto CD and DVD is doable. But there is a chicken-and-egg; RFID tags are expensive, so they aren't cheap enough even.

    But we are now seeing hundreds of millions of tags per year. The most of the valuable products will be RFID tagged within the next 5 to 10 years. The problem of RFID tagging for every can may elude us, but a bottle of wine can be RFID tagged. For example, if there is a contamination problem as in Germany a few years ago, you could find specific batch and just destroy those.

    The other place with tremendous savings is manufacturing. Tagging of piece parts to automobiles to mobile phones to electronic goods is going to have serious impacts.

    There will be oblique effects. What happens if you buy a TV set, which is RFID tagged. This is where the whole insurance industry changes. At night, you plug in your TV set and it says ah-ha, I can see a washing machines, a TV, hi-fi, and microwave. It recognizes a TV, but says this is the wrong TV. I think I've been stolen. There is a little more intelligence inside the RFID canopy. You can change your home insurance. It's already been started in U.K. and U.S. for high-end automobiles. For $350, you can put a tag into your automobile and police can find it if it is stolen.

    The biggest area is the tagging of containers, which is a security issue. 10,000s of containers enter the U.S. every year. We want to know: what is in the container, when and where loaded and sealed, has it been tampered with, has it been opened?

    Is there anything making noise, funny smells, and anything suspicious? I think the US government will demand minimum limit of tagging. That will have to be a global standard, which will pose some interesting problems.

    In management of seagoing containers, if you know where you container was, you could save millions of dollars. Logistics and planning down to JIT for building lot will be a big take 15 to 20 years and a massive changeover.

  3. And a massive business opportunity?
    In the logistics business, when a container ship rolls and hits 10 to 15 degrees, the captain decides to dump containers into the sea. Every year, about 10,000 containers are dumped into sea. If you knew your container went into the sea, you could make contingency plans as soon as something happens. If you don't know, you're in trouble.

    If I was shipping a container from the U.K. and knew you weren't in a hurry, I could negotiate a cheaper rate - a first-on, last-off, half-full ship, or stand aside while somebody else took my spot for a fee. You could see space as a commodity that could be traded. But now it is so crude, that the level of flexibility isn't there.

  4. What are the major impacts of RFID on business?
    I think it will increase the efficiency. One fall out is that you'll never fewer people in the logistics change. Computers will manage the inventory. Instead of a man with a clipboard, you'll be able to find it with electronic tagging. The other big benefit is that you'll be able manage the process from end-to-end. Right now, the people who provide the funding for the raw materials, manufacturing, insurance, trucks and trailers, etc. are all different. You have a concatenation of inefficiency.

    About 47% of the world's GDP is in transaction costs. A large slice of that is in the logistics chain, so there is gross inefficiency that can be eliminated. If you release tens of millions of dollars into the world economy, it will result in a global economy with far efficient. I think companies will operate with fewer people.

    The knowledge base will be quite phenomenal, so now you have to think about the meta data. When did you shop? What did you buy? There will be knowledge about the individual customer, business, supply chain, and manufacturers. It will be very different world.

  5. What types of new jobs will RFID create?
    If you look at U.K. in medieval times, you will find 85% of the population concerned with farming; now it is 1%. Now, 17% of the working population is in manufacturing, which will be replaced by robots and decline to a few percent. Everything ultimately becomes commoditized. In the 21st century, there will be new knowledge-based industries that we haven't even dreamt of.

    We have major problems with healthcare due to the demographic bulge. We have a crisis. We have to get people to provide more care. Tagging people will be important. Patients will be sent home and monitored. Caretakers will be rushed to their aide. It will be a bigger industry now.

    If we don't create a massive globalization and creation of wealth worldwide, we will horrendous security problems that will make the Mideast problems look like DisneyWorld.

    I think we will see a major change in demographics and production and growing dependence of nations on each other. Now, if you attack me, I'll attack you. If you make my shoes and electronics, I sell you products. We have a situation of imutually assured destruction. In my vision, the world is a more stable place. New industries are formed across many fronts.

    Right now, you have the human genome decoded. We don't understand the protein structure and messaging, so proteomics will be big. We'll need thousand times more computing power, which is just a decade in computing growth. Robotics will help us decode the protein. Instead of looking for a needle in the haystack, we'll have one guy with a magnet. We'll be able to understand the relationship between genetics and proteomics, and targeting drugs to your body. We could see an era of superhealth, where people live a little big longer and happier without the problems we have now stake off arthritis, etc. In an ideal world, we would all live until 90 without ailments.

    What we don't know is the impact of knowledge engineering. In the 1930s, we were postulating Dick Tracy phones and couldn't imagine the Internet. Never in history has human imagination failed us. Everytime a new technology comes along, we create a new industry. What happens when we start to replace human labor with robots? When a humanoid robot walks around the corner and we anthropomorphize technology, we get concerned. You have to think of robots, HAL-like. You have to imagine a world where robots do mundane things and humans are freed to be more creative.

    What does this really mean? Right now, the most sophisticated decision-making tool is knee-jerk reaction. It's a paradox that the military plays all day, but in business we don't play. The military does modeling and all the moves are thought out, but in business it's like playing chess with blindfolds on and making moves at random. If we have the computing power, we could make models of individual companies, sectors and nations to play out business decisions. No model gives you accurate outcome, but it gives you sensitivity of your actions. So that type of war gaming will come with greater computing power and AI in the machines, which will change business. Now you have to link intelligent machines and metadata about manufacturing, the delivery of goods, and behavior of things and the whole thing changes.

  6. What is your vision of smart objects and smart environments? How will this world change? What can we expect?
    It's a kind of spatial serendipity. Driving down 101 yesterday, I got a phone call from a gentleman I've been working with in India and the U.K., but he wants to meet in San Jose, so I met him at 5PM. If you have a smarter world, I might leave the hotel, send an email to my secretary, fiancée, and to my family members, saying: Leaving Cupertino for San Francisco, arriving in London at home at Monday afternoon. That can be automated. I would like to give them 100% access to my physical location. It would free up a little more time and reduce pressure on me.

    I believe in appropriate technology. There is no way you can type as fast as you can scribble. I use text messaging while traveling. If I'm at a fixed location, I'll email. I use Skype (www.skype.com) a lot for business. This morning, I was working with a fellow in U.K. with a company in North Carolina and I can talk with Skype, which is a foretaste of the future. We will create trusted communities where friends and business colleagues will share activity location, which will increase our business efficiency.

    If you want a nightmarish world. To me, young people will love this. Imagine you are watching a rock concert on TV in the lounge, you go to the kitchen, the rock concert follows you to the TV set in the kitchen, the mobile phone in the garden, and the car. Some people may really like it, but I would find it one version of personal hell.

    If you have personal devices and tracking, media will have the ability of following people around. In the past, phones followed you around. I can imagine entertainment will follow me, but I want to be left alone. As long as I have control, I'm fine.

    Right now, my medical records are in the U.K. What use are they to me here? I would want the San Francisco ambulance crew to immediately have my medical record. I would be happy to wear a memory stick.

    There is always an upside and a downside. As long as we engineer the upside much better than the downside, it will be phenomenal.

    But you can imagine the security implications of some malcontent spotting and shooting us using an RFID scanner. That is the downside, so we have to think long and hard. Providing the police, hospitals, nurses, ambulance crews with my RFID medical record, I'm happy, but not strangers scanning me.

  7. As we shift to a mobile society worldwide, we have more anonymity and security threats, how do we think about this issue?

    I have no doubt that we have to give something up. We can't have a world totally free and secure without losing something. Hard line: no privacy and get over with it. I think every human being has a right to self-determination and have hand on on/off switch, but they don't have right to cause mayhem.

    It will be easy to read eye/irises with technology. It's easy to put RFID into passports, possessions and people. If we want to control and limit criminal and terrorist element, this is a devil's bargain. We have to give up a bit of privacy. We have to say we elect a government to husband the nation and act in our collective best interest. The government of any nation can get any information about us. I have no problem being scanned in the airport by the British, American and nation in the western world, but there are governments I worry about. That becomes a question of personal risk. You don't wander into Africa or Mideast without thinking about security risks and personal benefits, which won't change in the 21st century.

    I work in the U.K., Israel, India and the U.S. I would like to walk right into San Francisco Airport through immigration waving my passport. Why can't we recognize me? The first step is the camera and the fingerprint. The next step is I get regular traveler status and a trusted citizen since I have high security clearance, so I could have an implanted chip and walk right through, which would make international travel faster, more efficient, and safer.

    If you travel, you spend as much time in the airport as in the air. There are 2 to 3 hours at each end, which is absurd. RFID will cure a lot of those wasted hours, so I see huge gains.

    If you broaden the discussion, we will run out of oil. Oil has the most dense storage, barring nuclear power, so people are looking at slingshot power where you are shot over the Atlantic like a dart. You might spend a few hours in the air and some amount of time at the airport.

    The analogy is the supermarket, where you spend half an hour gathering goods and 20 minutes in the checkout line. So with RFID the dream is being able to walk right out.

    I see a cumulative effect of making the society more efficient. We can't get time back.

  8. Governments that cannot improve security will lose economic development and business because people are invulnerable and unstable areas become even less desirable. Governments will be pressured to do something.
    The nightmare is the successful become more successful. The unsuccessful plummet and we end up with a bigger economic divide, which would lead to even more instability.

    I have faith in humanity, but if the richer nations don't donate more, we will get a bigger divide. In industrial nations, we're already doing that. We'll make higher education reachable and job opportunities equal. We're doing it within nations, but need to do it nation-to-nation, which is a big challenge. One of the worst things is going through the United Nations to give high-tech tractors to Africa, but it breaks and nobody can use it.

    Whatever you do, don't cure the AIDS problem in Africa without providing clean water, sewers, and food, you are condemning more people to death. Our governments look at point solutions, which lead to a disaster. What they need is crude tractors and training to fix them. They need an economic, legal, commercial system that allows them to sell their goods and retain profits. The ferocious business environment in the west leads to rock-bottom prices for commodities and developing nations aren't making any money.

  9. What should policymakers in China, India and other developing nations do to create jobs and ensure security?
    First, they've got to not see RFID as the work of the devil, but how to embrace it to create benefits. How do they reduce costs and improve the quality and reliability of their goods? How do they use RFID to improve their manufacturing systems? In China, manufacturing is built on human sweat. Now, China is suffering a shortage of raw materials and people. In India, the software outsourcing industry is running out of electricity, telecom capacity, and good people. There is an understanding problem of educating people, and creating less bureaucratic management practices and commerce as efficient as rich nations.