Guide for Value Creation in the Engineering Enterprise (Updated March 4, 2018)

  • Engineers’ remuneration and recognition is strongly related to the value they create – a well-supporting finding in economics.
  • Our research shows that engineers today know little about value creation, and what little they do know does not align well with investors’ ideas.
  • We conclude therefore that engineers will be paid less than they think they are worth (which agrees with survey findings) and second, there is plenty of potential to improve engineers’ remuneration and recognition if they take the time to learn how to create value.

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The Great Artificial Intelligence Scam (Again)

{A longer version of this post appeared in the Australian Financial Review on August 18th under the title “When robots learn to lie, then we worry about AI“.}

Great claims are being made for artificial intelligence these days: AI.

Amazon’s Alexa, Google’s assistant, Apple’s Siri: these are all claimed as examples of AI.  Yet speech recognition is hardly new: we have seen steady improvements in software like Dragon for 20 years.

We have seen claims that AI with new breakthroughs like ‘deep learning’ could displace 2 million or more Australian workers from their jobs by 2030.

I was fortunate to discuss artificial intelligence with a philosopher, Julius Kovesi, in the 1970s as I led the team that eventually developed sheep shearing robots.  With great insight, he argued that robots, in essence, were built on similar principles to common toilet cisterns and were nothing more than simple automatons.  “Show me a robot that deliberately tells you a lie to manipulate your behaviour, and then I will accept you have artificial intelligence!” he exclaimed.

That’s the last thing we wanted in a sheep shearing robot, of course.

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Engineering Value Creation

Before reading this, please see the post of December 7, 2017, where I have released a comprehensive guide for engineers, students and educators on value creation in engineering enterprises…..

In my last post, I wrote a brief explanation about value and value creation, noting that “value” has many different meanings.

In this post I will summarize what Bill Williams and I think is a new theory of engineering value creation, the subject of my address to the International Conference on Engineering Education Research (iCEER 2016) in Sydney on November 24.

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Trump needs engineers who understand value

Americans have voted, and most of us were surprised.

I just watched a CNN interview with a former factory worker who voted for Trump. “We need lots of small factories with 200-300 people making things, employing Americans.”

Trump can’t deliver that.

Only engineers can make that happen, engineers who know how to create sufficient value to attract investors.

Bill Williams and I have recently discovered that many engineers know little if anything about creating value for investors.  Supported by students, we interviewed practicing engineers and found that, for example, most associate the word “value” with a number in a spreadsheet.

We also discovered little in the business and engineering research literature that can help.

A small number of “expert engineers” have worked it out for themselves, without necessarily being able to explain it in simple terms.  They are well rewarded by their clients and employers because they create so much value for their enterprises.

We have recently written a detailed explanation which, we think, explains how these experts create value, and we hope this makes sense for many more engineers who could just make enough difference, everywhere.  Not only to help frustrated Americans.  Engineers who know how to create value effectively could transform our world and eliminate poverty.

Since the industrial revolution, we have all come a long way, but most of us know we cannot sustain our civilization into the future without making some big changes.  We engineers have to lead these changes, but we need huge resources from everyone else to make it happen.  And that requires insights into value creation that elude the vast majority of engineers right now.

In coming posts I will do my best to explain the fundamental ideas that have emerged from our research and what we mean by value creation.

Why failing drinking water supplies are a catastrophe for us all

When I started writing about drinking water supply in low income countries (like India and Pakistan) I saw it primarily as an economic issue.  It was only when I read recent papers on stunting that I realized the catastrophic health and economic impacts of stunting caused by faecal contamination of drinking water supplies, now common in many parts of the world.

Stunting occurs when infants drink contaminated water causing repeated diarrhoea attacks which result in permanent damage to the intestines, restricting nutrient intake so affected children suffer from malnutrition even if they eat enough. Nearly half of all children in South Asia and other parts of the world are now affected.  So many piped water schemes provide contaminated water at the point of consumption.  The water pumped into the system may be safe to drink, but what goes into the mouth is not.

The only way to start fixing this problem is safe drinking water distribution. Obtaining and treating bulk supplies of safe drinking water is relatively inexpensive: even desalination costs only $0.50 per ton. While there are many water-scarce regions, in most there is still plenty to drink once treated.  The scarcity affects agriculture more than drinking.

Piped water supply utilities are failing in most low-income countries and few if any provide a 24/7 supply of safe water. For example, “good” utilities in South Asia provide intermittent water for 1-2 hours every 2nd day: sewerage seeps in through leaks during the “off” time contaminating the network. Many leaks result from crude attempts by engineers to enforce revenue collection by temporarily disconnecting adjacent water and sewerage pipes to recalcitrant customers. Air trapped in pipes destroys meters. A downward spiral in service quality and revenue collection forces people to stand in line to bribe tanker drivers to refill contaminated domestic tanks. Water has to be filtered and sterilized to make it safe, or supplied in 20 liter bottles at $100-150/ton.

Low trust between consumers, utilities and government undermines attempts to improve service quality. Conventional water supply technologies require trust and collaboration between diverse social actors which is much more difficult than in high income countries so the problem persists.

And for the majority of people who have no piped water, the situation is even worse. When women carry and purify water their labour is unpaid but comes at a cost: more than $30/ton across South Asia using standard value of time models.

The consequences of drinking water safety failures affect everyone: the real cost of getting just enough can exceed 10% of family income. It helps to explain stubbornly persistent poverty, stunting and malnutrition from environmental enteropathy caused by fecal contamination. The economic and health catastrophe in low-income countries affects us all.

In the next post, I will describe why so many previous attempts to solve this problem have failed and how I came to see some elegant solutions.

An update on Close Comfort

About 10 months ago I was sitting in the lounge room of our family home in Islamabad, Pakistan with my wonderful wife Samina Yasmeen.  She is a professor of Political Science at the University of Western Australia and directs the Centre for Muslim States and Societies there.  We had just inspected a huge pile of boxes containing hundreds of Close Comfort air conditioners in Lahore which we were planning to sell in Pakistan in the summer.

“Well Professor, what do we do now?”

Never having even sat by the road side to sell lemonade, as two professors, we wondered just where to begin.

Close Comfort emerged from my addiction to Pakistan mangoes developed in the 1990s and aversion to summer load shedding introduced by President Musharraf in response to Pakistan’s inability to pay for electricity.  It was a love-hate relationship because the best mangoes come in the hottest months of May and June when the indoor temperature without air conditioning is around 40C day and night.  The electricity supply to each part of each town and city is disconnected in a mostly predictable rotating sequence.  It was new to Pakistan in the early 2000s, and now common in many countries.

I decided not to give up my love for mangoes.  Instead I decided to try and develop a battery powered personal air conditioner to deal with my hate for load shedding.  I lay in bed during the power blackouts, sweat running down my skin, listening to the inevitable mosquitos ready to pounce.  The air conditioner had to be just powerful enough to keep the two of us comfortable at night, with mosquito protection, and it had to run on a domestic UPS (uninterruptible battery backup power supply).

A good ten years passed before we had the boxes in Lahore.  It was only after I tried a wooden prototype in Islamabad in June 2013 with amazing success that we decided to finance some prototypes and we had now reached our first commercial launch.

It has been a whirlwind 10 months.  Our prayers were answered and the right people stepped into our lives and the right moments.  Samina’s charm attracted so many.  Amazingly we sold hundreds of ACs with our special tents that intensify the cooling, essential in the height of summer in Pakistan.

Now several hundred people in Pakistan have slept soundly in summer, free from interrupted sleep, without worrying about power bills and mosquitoes maybe for the first time.  We would like to take this technology to more people in future.   It could be one way to avoid huge increases in electricity demand that could lead to unacceptable CO2 emissions.

Running a technology start-up is not for the faint-hearted.  As a late-comer to entrepreneurship, I am now almost accustomed to the ups and downs and dramatic changes from one day to the next, but not quite.

We are a long way from profitability, but at least after 9 years of company operations we have some positive cash flows.

I will bring more stories from this adventure from time to time.  For now, read the post “Lost in Urdu Translation” to give you some insight into the difficulties we have had to overcome.  Browse our Pakistan Facebook pages for some of the reactions to the product.  Try our interactive experience to educate prospective customers about a radically new approach to air conditioning.

And, at the Close Comfort web site you can also browse the new challenge that presented itself: developing an application has pre-occupied me for the last 8 weeks or so.