Thank you, Bob, for that thoughtful introduction. And, thank you for the invitation to join you for your annual meeting.
I am proud to note that Westfield and The University of Akron have a great working relationship and have collaborated on many significant projects, including the Medina County University Center. I am proud to note that Westfield and The University of Akron have a great working relationship and have collaborated on many significant projects, including the Medina County University Center - and that is making a statement!
And it is clear to us at the University that Westfield Insurance understands the importance of continuous learning, especially in a business world that is in a constant state of flux, as companies merge, acquire, downsize, expand, move, outsource and spin off in the cycle of creative evolution.
And as we have witnessed vividly during this recession, no company, indeed no industry, is too big to fail.
"Seismic rumbles of change" are plunging industries, as well as universities, into cross-currents and rapids of change that already are transforming traditional business paradigms - to say nothing about the interrelationships among academia, industry, government and the public.
Now more than ever before, change is happening at such a rapid pace that positive economic growth for the world, its nations and even individuals depends on our moving beyond accepting change and the interesting times that change brings . . . to actually driving change and the progress it brings.
But effecting change often can be difficult. As Robert Kennedy once observed, "Progress is a nice word. But change is its motivator. And change has its enemies."
And while change is not always easy, this insurance company has thrived for 162 years by effectively managing change and the risks and opportunities that come with it.
Indeed, your business is premised on managing risk - on seeing the business opportunity in risk and profiting from it at the same time that you enable others to find security in your product.
Yet, you are doing this at a time when America - and Ohio in particular -seems increasingly risk averse; we are timid and afraid of change, and often this fear gives way to "anxiety paralysis."
But remember that risk and anxiety are two quite different conditions.
A simple story will illustrate the point:
The Surgeon General tells us that cigarettes kill more than 150-thousand Americans each year, and automobiles on our highways kill more than 50-thousand people per year. But, nobody seems to be afraid of cigarettes or automobiles.
However, according to the Deputy Director of the National Institutes of Health, everyone is afraid of sharks.
The Navy says that there are about 50 shark attacks worldwide each year. The National Bureau of Health Statistics doesn't even keep a record of shark attacks because there are so few. (They know how many people are killed by bee stings, but not shark bites.)
The best guess is that sharks kill two or three people each year in the United States.
But, the fact is that if you went to a crowded beach and shouted "shark" - everyone would race out of the water, jump into a car, light up a cigarette, and drive home!
That's the difference between anxiety and risk.
Indeed, where reason and calm prevail, there is always optimism for the future, and much that can be accomplished for the common good. With reason, calm and optimism, we can pursue what human beings do best . . . and that is, to innovate.
Discovery and innovation built America and the world, whether by ordinary people doing ordinary things or through experimentation and discovery in the laboratory.
Medicine, communication, transportation, business - every segment of society and culture has been shaped by discovery and the ability to apply it in meaningful ways.
Not all innovation has been good. Computer viruses and reality TV come to mind.
But on the whole, innovation has been an astoundingly good thing. And America has benefited greatly from its leadership role in research and technology.
Americans invented the airplane, the airbag and aspartame.
Bar codes, credit cards, and corrugated cardboard.
The integrated circuit, the Internet, Kevlar and the light bulb.
Morse code, the pacemaker, vulcanized rubber and synthetic skin.
We pioneered the modern zipper. Even the Zamboni is a triumph of the American spirit.
As is modern-day agriculture.
First, we invented the self-polishing steel plow, which allowed crops to be grown in sticky clay soil and opened up the heartland to farming. Then we invented the cotton gin, the reaper, the corn picker and the tractor.
And Westfield Insurance was right there to protect those innovations, as farmers joined forces in 1848 to found the Ohio Farmers Insurance Company. And, you continue to be one of the longest-running writers of farm-owner insurance in the nation. 1
Farm science and old-fashioned hard work improved crop and animal health, spurred exponential growth in yields, improved human nutrition and virtually eliminated dietary disease in the western world. . . AND made the United States the world's breadbasket.
When we aren't inventing something, it seems we Americans are always finding ways to apply the discoveries others have made.
We didn't discover penicillin - a Frenchman did.
We didn't discover its ability to kill infections and we didn't lead the clinical trials - the Brits did that.
But when mass quantities of penicillin were needed during World War II, Americans figured out how to produce it fast enough and cheap enough to make it available worldwide.
We didn't invent the internal combustion engine, or the automobile, though it sometimes seems like we should have . . . because an American perfected the assembly line, making mass production possible and allowing ordinary working people to purchase a car...travel to where the good jobs were...and return home at the end of the day.
Our increased mobility made work more profitable...commerce more economical...information more accessible. And the result was nation-changing, world-changing.
Average incomes and homeownership skyrocketed. More efficient and cheaper transport of goods led to a stronger economy.
The American automobile industry, and the transportation revolution it sparked, changed our landscape, both literally and figuratively.
American discovery and innovation have strengthened our nation and our way of life. Even before the information-technology revolution, studies were showing that as much as 85% of the growth in Americans' income per capita was due to technological change.
By leading the way, Americans have carved out a competitive position that has been the envy of other nations for more than a century.
This afternoon, I will develop the theme of innovation along three lines of thought:
First: I will describe why our national innovation ecosystem - and, thus, our American way of life - is nearing a crisis, a crisis of capability.
Second: I will examine the vital role of technological innovation and entrepreneurship in overcoming that challenge, and
Third: I will conclude by sharing some thoughts on entrepreneurship, risk and wealth creation.
At the outset, we need to understand that the primacy America has long enjoyed around the world is increasingly being challenged by the very same forces of technological innovation that America itself unleashed.
Due to rapid advances in wireless technologies and the Internet, communication is no longer bound by the constraints of physical location or time.
So, education and training, research and development, collaboration, investment and trade can occur at any time between any number of entities worldwide. We have brought about an Age of Globalization in which the peoples and markets of the world are moving increasingly toward one another.
And in this global, Internet-driven economy, the issue is no longer just a matter of simple competition; it is one of America's capacity to innovate and thereby continue to have economic growth.
How are we doing?
If trends continue, China's economy will rival ours by 2020. India's will catch up in the 2040s. 2
What is more, one increasingly hears this question: why should Americans expect favored status when we show up on the world stage with a great big sign around our necks saying - "We are very expensive and don't really know very much!"
From our work and collaboration with China, I can tell you that they are very interested in what we in the United States are doing, and unfortunately what we are doing is not always impressive when compared to other countries.
For example, while only 10% of U.S. students are pursuing degrees in Science, Technology, Engineering, Mathematics and Medicine (or STEMM for short), 60% of students in China are pursuing STEMM degrees. 2
Some predict that, soon, more than 90% of all scientists and engineers in the world will live in Asia. In fact, South Korea graduates as many engineers as the United States - even though that country has only one-sixth of our population. 2
And when compared to their peers worldwide, our 12th-graders fare poorly. Sweden leads the way in science; the Netherlands leads the way in math. The United States ranks 16th and 17th, respectively, behind countries like Iceland, Slovenia, Hungary and Lithuania.
Think about these facts and then ask yourself if we're investing in the kind of brainpower that we are going to need...the kind of brainpower that other nations are developing.
Ask yourself whether America is positioned to compete in all the ways that have allowed us to improve our standard of living year by year, decade by decade; or whether our country is destined to become a second-rate economic power with a middle-of-the-road standard of living.
Ask yourself whether America is not already in a crisis of capability.
Of course, America is not helpless or without a sense of direction.
I submit that the future always has been predicted by the technologies that created it - with scientists, engineers, entrepreneurs and other innovators leading the way!
One-thousand-and-ten-years-ago, at the turn of the last millennium, there were no organized industries.
At the turn of the last century, in 1899, some of our dominant industries were hardware, bicycles, and telegraphy. And more than half of us were still living on farms and involved in production agriculture. (Today, less than two percent of our population is involved in agriculture.)
But entirely new industries are products of 20th Century innovation . . . from the airline industry, to microelectronics, biotechnology, robotics and many more.
It was innovation that enabled the agricultural and industrial revolutions at the turn of the last century. And during World War II, innovation that was initially vital to the Allied war effort laid the groundwork for technological leaps in medicine, aviation, energy, electronics - developments which today affect virtually every realm of our human endeavors.
And with the development of transistors, the era of microelectronics began and sowed the first seeds of the Silicon Valley. From such modest beginnings, we are now immersed in the information age.
The research we did related to the space race after Sputnik not only resulted in Americans walking on the moon, but also gave rise to the space industry and enabled new technologies in satellite communications, computer science, robotics and miniaturization.
As recently as 1970, a single discovery in molecular biology initiated the new industry of biotechnology, an industry from which we are now seeing dramatic advances in medical science and the introduction of effective new technologies such as the production of human insulin by factories of microorganisms.
These are just a few examples of how innovations drive change . . . each effectively demonstrating that new knowledge builds new capacities just as surely as new materials build new structures, and each demonstrating that our nation's investments in education and research have built very real assets that have yielded very real returns on those investments.
In today's global economy, knowledge is universal, and staying close to the source of knowledge creation is not just a good idea; it is a business necessity.
Here is how Tim Ferguson put it in Forbes magazine: "In Cleveland('s) heyday, . . . proximity to water or rail mattered a lot. Today, proximity to a university campus matters a lot." 3
That is why the Chairman Emeritus of LORD Corporation Donald Alstadt maintained an office at each of 10 or 15 universities, so that he could be the first to "mine" new knowledge and technology and thus gain a competitive edge for his company.
And that is why Westfield Insurance, The University of Akron and local officials took this strategy a step further by having the University maintain its office near yours, so that the Medina County University Center could, in part, bring new knowledge and technology to the largest employer in one of the fastest growing counties in Ohio.
Now, you may well ask how we can quantify the economic value of new knowledge and technology; so let me give you just one example of how much new wealth can be created.
Think of what we have come to know as Moore's Law - named after Gordon Moore, co-founder of Intel - who predicted in 1965 that processing power would double every 18 months with corresponding price decreases. Of course, we all know that with increasingly smaller and more affordable computing power, we went from the era of mainframes to that of PCs, to that of PDAs like Blackberrys and iPhones and now to iPads.
Along the way, with smaller and more powerful computers, innovative companies have brought us networks, linkages among networks and the Internet.
And all of that creates new value.
How much new value?
Mike Ruettgers, former executive chairman of EMC Corporation, tells us that in each successive wave of computer technology, there has been a tenfold increase in wealth creation, from $80 billion in the mainframe era, to $800 billion in the wave of the personal computer, to what is now rapidly approaching $8 trillion in the current Internet era. And already, Mr. Ruettgers sees a new emerging opportunity centered on information itself that could reach $80 trillion! 4
That, ladies and gentlemen, is the power of innovation . . . the power of change!
And just as technological innovation creates new wealth, it also impacts the speed and productivity of how we go about creating new value, and so much so that we have to construct artful analogies just to comprehend the speed and productivity changes. Consider these three "what if" analogies:
"What if the airplane had advanced as far and as fast as the computer? If that were the case, today's jumbo jet would carry one hundred thousand passengers, and it would fly them to the moon and back for $12.50 at 23,400 miles per hour." 5
What if the automobile had advanced at the same rate as the computer?
"We could today buy a Rolls Royce for a dollar and drive around the world on a gallon of gas." 5
And, here is my favorite of all! What if education also had advanced as far and as fast as the computer?
"...a high school or college education - which still takes 12 and 4 years, respectively, to complete at an average cost for either of about $60,000 - could today be completed in less than 10 minutes for about 5 cents!" 6
So, imagine what will yet happen in our lifetimes and think of the role that all of you can play in shaping our world . . . whether it is by teaching and guiding others in our educational enterprises; by applying technology in business and industry or in service to our community; or by designing and building the structures, processes and technologies for the 21st Century as the new wave of business opportunities will brink new risks and surely new insurance products in:
Imagine where Westfield can best position itself by looking for the new opportunities created by all of these new technologies. Join Robert Shiller in going Beyond "Irrational Exuberance" to "The New Financial Order" and envision new insurance products and new securities that can incentivize valuable career choices and securitize the value of intangibles in our economy.
Because success in the new economy will belong to those regions that create and nurture the human resources of intellectual capital - the people that create new knowledge and new technologies and quickly translate research discoveries into marketable products and services - the entrepreneurs.
A recent story in The Wall Street Journal got that point across when it challenged our federal government, "...to grasp this essential fact: Entrepreneurs are not just a cute little subsector of the America economy. They are the whole game. They will give us tomorrow's Apples and the multiplier effect of small businesses and exciting new jobs that go with them. Entrepreneurs are necessary to keep our large multinationals on their toes. It's no coincidence that the entrepreneurial flowering of the 1970s forced a managerial revolution in large companies during the 1980s and 1990s. Without (Apple's) Steve Jobs, there would have been no Lou Gerstner to reinvent IBM in the 90s. Entrepreneurs like Steve Jobs make everyone better." 7
And that is also the message of the Innovate America report out of the Council on Competitiveness:
"where once we focused our companies on quality and efficiency, . . . today we must focus our entire society on innovation." 8
We must foster our students' interest and education in science, technology, engineering and mathematics...not only to produce more professionals in those fields, but to produce new generations that appreciate and seek technology-based innovation.
Like many of us needed to become computer literate, our younger generation must become innovation literate, and the following generations must see the innovation process as an inherent part of everyday life.
All of us must become agents of change, and go on to invent the future and create wealth.
Now, please notice that I did not say accumulate wealth; I said create wealth. While both are permissible and central to the free enterprise system, they are very different.
Accumulating wealth leads only to individual riches. Creating wealth, on the other hand, lets you enrich the community by allowing the economy to expand for the good of the whole.
Business columnist Daniel Akst, puts it this way: "If you have a good education, you shouldn't just consider getting rich. Creating...wealth is a moral obligation. Do so and you can take comfort not just in financing public services but in knowing that you are giving people what they need and want..." 9
The primary contributors to wealth creation are, of course, entrepreneurs - the risk-takers.
Let me leave you with one final observation: Those of us in higher education often ask for feedback on the kind of the skills that employers want us to instill in our students, and we mostly hear - give us communications skills, writing and quantitative skills, interpersonal skills suitable to working in a team environment, and so on.
But recently, a new request is being heard: "Give us emotional resiliency."
What executives of high-tech start-ups are increasingly telling us is that their employees need to welcome change...to be prepared to take risks and sometimes fail...to be prepared to adapt to the fast pace of technical innovation.
Because, whether as individuals or as a nation, we prepare ourselves best for change by continuously developing our skills and adapting to the changing requirements of the world we live in.
Making our mark in a global economy will require all of our brainpower. It will require us to accept new approaches to education and to adopt new expectations for our young people.
It will require us to help every American to envision that cycle of discovery and awakening.
It most certainly will take inventiveness; innovation; creativity; and pure, raw ingenuity...which in America, are never in short supply.
So, be cheerful and plunge ahead.
* * *
1. Westfield Insurance Website, www.westfieldinsurance.com
2. Fisch, Karl, Did You now? The Fishbowl, http://thefischbowl.blogspot.com/2006/08/did-you-know.html (and) http://shifthappens.wikispaces.com/page/code/History+of+the+Presentation
3. Ferguson, Tim, Forbes, (1999, May 31)
4. Ruettgers, Mike. (2000, October 31). Information infrastructure: The new business accelerator. Presented at the workshop, Transitioning Into the New Economy, Cleveland, Ohio.
5. Washington Post National Weekly Edition. (1988, May 9-15). p. 6.
6. Washington Post National Weekly Edition. (1989, Dec. 25-31). p. 24
7. Karlgaard, Rich, Apple to the Rescue?, The Wall Street Journal, (2010, Jan. 27)
8. Council on Competitiveness (2005). Innovate America: National Innovation Initiative summit and report. Washington, DC: Council on Competitiveness.
9. Akst, Daniel (2004, June 11). Graduates, take heed. The Wall Street Journal. p. A13.
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