Wednesday, 5 September 2012
Ben Epstein's Wi-Fi Roaches
When Ben Epstein sees a cockroach, he’s more likely to get out a circuit board than a can of Raid. Epstein, 57, is a vice president at OpCoast, a defense contractor in Point Pleasant Beach, N.J. For the last few years he’s been using insects—specifically, the death’s head cockroach, a two-inch-long, glossy brown branch of the species—to create wireless networks. The goal is to use the insects to communicate with people trapped in collapsed buildings, mines, and other areas rescuers can’t easily reach. The insects might also conduct surveillance. “These are real bugs that can do bugging,” Epstein says, laughing.
On its belly, each roach carries a dime-size circuit board along with a radio, a microphone, and a battery. The gear, which adds up to two grams, about half the weight of a roach, is still in the prototype phase. As the bugs crawl into crevices and disperse, their microphones pick up sounds, while the radios transmit data via a local-area wireless technology called ZigBee. In the future, the bugs might carry sensors to detect radioactivity or chemicals.
Epstein and his team are working to make the electronic circuitry even tinier, so it can be carried by smaller insects such as crickets and water bugs. They’re also testing a metal composite that flexes like a muscle when electricity is applied. Placing the material on a cricket would alter the flutter of its wings and distort the pitch of its chirp. It’s a way to relay information as aural zeroes and ones, like the bits in a computer, which could be decoded by software. “It has the potential for being a redundant communication system at a low cost,” says Dwight Woolard, a program manager at the Army Research Office.
Epstein came up with the idea of using insects to form wireless networks while listening to swarms of cicadas in Shanghai, where his wife is from. Submitting a funding proposal “was like writing a science fiction novel,” Epstein says, but resulted in $850,000 from the U.S. Army. “Ben is extremely creative,” says Hong Liang, a professor of mechanical engineering at Texas A&M University, one of Epstein’s partners on the project.
Epstein has tinkered with electronics since he was a kid in Cherry Hill, N.J. “My bedroom looked like a TV repair shop,” he says. “Everybody was giving me their old junk.” After studying electrical engineering at the University of Rochester, he earned a Ph.D. in bioengineering from the University of Pennsylvania in 1982. He then spent a year doing research in France, where he indulged his passion for pipe organ music. “I lived in Paris and had the schedule of all the masses,” Epstein says. “I tried to get three in on a Sunday.”
He worked as a researcher at RCA, then led business development for France Telecom in the U.S. About a decade ago he landed at OpCoast, where he now works on technologies that help the military jam radios. About half of his time is devoted to insects—for whom he’s developed an unusual appreciation. “I always thought roaches were icky,” Epstein says, “but these are actually cute.”
Tinkered with electronics growing up in New Jersey
Researched in Paris while pursuing his love for the pipe organ
Outfitting insects with wireless gear to help soldiers
The Rise of Innovative State Capitalism
Over the past five years, as much of the developed world has staggered through crisis, a new type of capitalism has emerged as a challenger to laissez-faire economics. Across much of the developing world, state capitalism—in which the state either owns companies or plays a major role in supporting or directing them—is replacing the free market. By 2015 state-owned wealth funds will control some $12 trillion in assets, far outpacing private investors. From 2004 through 2009, 120 state-owned companies made their debut on the Forbes list of the world’s largest corporations, while 250 private companies fell off it. State companies now control about 90 percent of the world’s oil and large percentages of other resources—a far cry from the past, when BP (BP) and ExxonMobil (XOM) could dictate terms to the world.
Even as state capitalism has risen, some writers, business leaders, and politicians contend that such systems fail to encourage innovation, the key to long-term growth and economic wealth. Ian Bremmer, the president of Eurasia Group and author of The End of the Free Market: Who Wins the War Between Corporations and States, argues that state capitalists “fear creative destruction—for the same reason they fear all other forms of destruction that they cannot control.” In China 2030, a recent analysis of China’s economy, the World Bank concurred, noting that the country needs “a better innovation policy, [which] will begin with a redefinition of government’s role in the national innovation system … [and] a competitive market system.”
It is a mistake, however, to underestimate the innovative potential of state capitalism. Rising powers such as Brazil and India have used the levers of state power to promote innovation in critical, targeted sectors of their economies, producing world-class companies in the process. Despite its overspending on some state sectors, the Chinese government has nevertheless intervened effectively to promote skilled research and development in advanced industries. In so doing, the state capitalists have shattered the idea that they can’t foster innovation to match developed economies. State capitalists’ combination of government resources and innovation could put U.S. and European multinationals at a serious disadvantage competing around the globe.
State intervention in economic affairs runs against the established wisdom that the market is best for promoting ideas. At the same time, throughout history, the governments of many developed nations have actively fostered groundbreaking companies, from Bell Labs in the U.S. to Airbus in Europe.
Brazil is perhaps the best current example of how a state-capitalist system can build innovative industries. Successive Brazilian governments have intervened—with incentives, loans, and subsidies—to promote industries that otherwise would have needed long-term private investment to make them competitive with U.S. and European rivals. At the same time, Brazil preserved strong, independent management of state-backed firms, ensuring they did not become political boondoggles.
Three decades ago, for example, the Brazilian government gave aircraft manufacturer Embraer lucrative contracts and various subsidies, recognizing that it could potentially find a niche in producing smaller, regional aircraft. Private investors were dubious of Embraer’s chances. Had it relied solely on private investment, the company probably would have failed; instead, it flourished, becoming the world’s biggest maker of regional jets. Similarly, by investing in deep-sea drilling technology, Petrobras, a state oil company with an independent management board, has made itself competitive with multinational giants such as Chevron (CVX), Shell (RDS/A), and BP.
By picking industries it could dominate and supporting them even when private capital was scarce, Brazil has created internationally competitive companies in a range of industries, from aerospace to clean energy. Today the government often backs companies as a minority shareholder or through indirect vehicles, allowing for corporate independence while still helping companies make important investments in research and skills. Many of Brazil’s state-backed companies have survived the global slump far better than multinationals because they can rely on government assistance to see them through.
Combining government support with a mandate for profitability and independent management has yielded successful businesses in other state-capitalist economies. Singapore has used government incentives to push companies to move into industries such as solar and other clean energies, which, although not necessarily profitable now, will be the emerging technologies of this century. A comprehensive 2009 paper by Harvard Business School looked at India’s more than 40 state-owned science and engineering research laboratories, which have used a similar type of public-private collaboration. It found that the Indian state labs had “more U.S. patents than all domestic [Indian] private firms combined.” In China, greater political interference in state-supported companies has been worse for profitability and innovation than in places like Brazil. And yet in recent years, China’s score has steadily risen on the Global Competitiveness Index, a World Economic Forum ranking of nations, even as the score of the U.S. has dropped.
The rise of innovative state capitalists presents a more than formidable challenge to U.S. and European businesses; it could push multinationals out of some markets entirely. In oil and gas, for example, state companies already control most of the world’s reserves, and as state companies like Petrobras become as innovative as multinationals, they will not require foreign companies for exploration, deepwater technology, or refining. In their own large domestic markets the innovative state capitalists will be able to match multinationals’ technology, giving them dominance over mobile communications, high-end retailing, and other businesses.
Some developed countries may respond by either curbing state-capitalist companies’ access to their markets or by intervening heavily in their own economies. Neither of these solutions is really viable. As the state capitalists’ biggest companies expand their global operations, their technology, connections, and capital will be almost impossible to keep out. And aging, heavily indebted nations face huge challenges reforming their entitlement programs: They’re in no position to pour the amount of resources into companies that Brazil, India, or China can.
Instead of trying to prevent—or worse, dismiss altogether—the rise of state-capitalist systems, U.S. and European companies and governments would do better to learn from them. Singapore offers one model of how the state can intervene in the economy without stifling entrepreneurship. The government there identifies industries that are critical to innovation and future technology, helps provide initial angel investments in small companies, tries to woo talented men and women from other countries who work in these industries, and uses state resources to ensure that universities focus on basic science research that will yield dividends in the future.
All these strategies require only modest state investment, and nothing on the scope of China’s or Brazil’s large-scale lending to state companies. The U.S. itself has effectively employed such policies in the past—before restrictive immigration policies kept skilled foreigners out, state and federal governments robbed funds from universities for other programs, and even the idea of the government helping foster new industries such as clean energy became politically toxic. (See Solyndra.)
Developed nations still possess a huge advantage over their emerging-market competitors: The U.S. and countries in Europe have mature, large venture capital firms, while places like India don’t. In emerging markets, when innovative companies become large enough to leave the state’s embrace, they may have nowhere to turn. Venture capital giants, on the other hand, can help small groundbreakers grow. This advantage can be enormous for countries like the U.S. And in a world where the emerging-market giants are learning to innovate, any advantage will be critical.
Kurlantzick is Fellow for Southeast Asia at the Council on Foreign Relations.Robots: The Future of the Oil Industry
NASA’s Mars rover may have something to teach the oil industry. Safely traversing the Red Planet while beaming data through space turns out to have a lot in common with exploring the deepest recesses of earth in search of crude oil and natural gas. Robotic Drilling Systems, a small Norwegian company that’s bent on developing a drilling rig that can think for itself, has signed an information-sharing agreement with NASA to discover what it might learn from Curiosity.
The company’s work is part of a larger futuristic vision for the energy industry. Engineers foresee a day when fully automated rigs roll onto a job site using satellite coordinates, erect 14-story-tall steel reinforcements on their own, drill a well, then pack up and move to the next site. “You’re seeing a new track in the industry emerging,” says Eric van Oort, a former Royal Dutch Shell executive who’s leading a new graduate-level engineering program focused on automated drilling at the University of Texas at Austin. “This is going to blossom.”
Robotic Drilling Systems, NorwayA Robotic Drilling Systems Rig
Apache (APA), National Oilwell Varco (NOV), and Statoil (STO) are among the companies working on technology that will take humans out of the most repetitive, dangerous, and time-consuming parts of oil field work. “It sounds futuristic,” says Kenneth Sondervik, sales and marketing vice president for Robotic Drilling Systems. He compares it to other areas that have become highly automated, such as auto manufacturing or cruise missile systems.
Until recently, robots have been a bit of a hard sell in an industry that has long relied on human ingenuity, says Mark Reese, president of rig solutions at National Oilwell Varco: “In the past, it’s been all about, ‘We need more and more people and experience, and that’s the only way to accomplish this task.’?”
The 2010 BP (BP) disaster in the Gulf of Mexico helped shift attitudes, says Clay Williams, chief financial officer at National Oilwell Varco. Eleven men were killed when the Deepwater Horizon rig caught fire and sank. Statoil has projected that automation may cut in half the number of workers needed on an offshore rig and help complete jobs 25 percent faster, says Steinar Strom, former head of a research and development unit on automation at the Norwegian company.
Robotic Drilling Systems is designing a series of robots to take over the repeatable tasks now done by deckhands, roughnecks, and pipehandlers on a rig. Its blue, 10-foot-tall robot deckhand has a jointed arm that can extend about 10 feet, with 15 or so interchangeable hands of assorted sizes. The robot is anchored in place to give it better leverage as it lifts drill bits that weigh more than a ton and maneuvers them into place. The company is also collaborating with researchers at Stanford University on a three-fingered robot hand embedded with sensors that give it a touch delicate enough to pick up an egg without crushing it.
The Mars rover is designed to collect data and take action on its own based on programmed “reasoning.” As a step in that direction, some companies are working on technology that will make drill bits more intelligent and able to respond instantly to conditions they encounter, such as extreme temperatures or high pressures. National Oilwell Varco and Schlumberger (SLB) have developed drill pipe wired with high-speed data lines to allow the bit to feed information to workers at the surface. Apache is writing software that will essentially allow the drill bit to think for itself, communicating directly with equipment at the surface that controls speed and direction. Graham Brander, the company’s director of worldwide drilling, sees it working much like a plane on autopilot, flying on its own with a human on standby, ready to assume the controls if necessary. “That’s what I view very much as the automation model for the oil and gas business,” he says.
Other breakthroughs are taking place onshore, where producers are racing to drill tens of thousands of wells in U.S. shale fields. On a recent morning in north Houston, Johnny Alverson, a senior foreman at rig builder Drilling Structures International (DE), fired up an 1,800-horsepower John Deere engine and picked up a remote control box as big as a car battery as he prepared to move a 167-foot-tall drilling rig without the aid of a crane. With the push of a couple of buttons on the remote, the green light lit up next to “walk” and the rig slowly heaved itself up five inches off the ground on four large, flat feet. The $20 million monster can move at a rate of a foot a minute. Says Drilling Structures Executive Vice President P.J. Rivera: “You start to feel good about yourself when you can pick up a million pounds with the flick of a thumb.”
The bottom line: In the wake of the BP disaster, the oil industry is automating. Success may save lives as well as boost efficiency.
Potholes? There's an App for That
When Boston Mayor Thomas Menino started the Mayor’s Office of New Urban Mechanics, the idea was to turn blogs and tweets complaining about neighborhood problems into a plan of action to solve them. The Democrat’s push for “participatory urbanism” means residents have more than 20 different venues to suggest improvements to City Hall.
The office’s most popular program is Citizens Connect, an app that allows people to report a variety of issues, including potholes and graffiti, directly to the right city department, along with pictures and a geo-tagged location. Since it launched in 2010, Citizens Connect has been downloaded more than 23,000 times and generated more than 31,000 repair reports. It allows the city to spend less time locating or inspecting the problems and more time fixing them. “What the app has generated is new eyes and ears in our neighborhoods,” says office co-chair Chris Osgood.
Best of all, pilot versions of such technological innovations generally cost the city less than $10,000. How? To encourage experimentation, the office partners with startups or other gadget makers willing to work on the cheap for the chance to actually test out their ideas. Other smart rollouts include a universal school identification card that grants schoolkids access to transit, public libraries, and community centers and an online tool to help parents pick the right public school for their children.
Paynter is a Bloomberg Businessweek contributor.John Chambers on Keeping Cisco on Top
My most important decisions are about adjusting to change. Over the last 20 years, we’ve reinvent-ed ourselves five or six times. Some were positive reinventions, some were very painful. I worry about missing market transitions, shifts in technology, a change in buying patterns. But I think fear is a wasted emotion. You have to change before it becomes obvious.
The toughest thing is when you see warning signals that others don’t. In August of 2007, we saw the financial institutions suddenly stop buying. Even though the CEOs are my friends and they were saying, “Nah, we don’t see a problem,” the data was undeniable. In 2009, when everybody was getting the darkest, we said, “You know, 2010 looks all right.” We bet, we did acquisitions, and it was a good year. In 2011, when everybody got really optimistic, we saw business from state governments starting to slow. I got crucified for being honest about negative trends.
We are reinventing ourselves again. People still think of us as a router and switch company. We’re moving away from being a plumber—though it’s an honorable profession that’s produced good financial results for us—and using our technology to change areas like health care and education. These past two years, we’ve gained market share across areas people said we couldn’t be in.
I’d like to say I like change. I don’t. I came out of IBM (IBM) and Wang Laboratories. Each company was on top of the world and then fell from grace. Once you’ve experienced that, and the pain that goes with it, the one thing you’re not going to do is not change. But once you decide on that change, you have to see it through. It takes three to five years to drive new strategy through a company. If it’s the right thing to do, you have to stay the course. That’s a mistake others make. They try different things in a crisis. If you’re changing your strategy every six months, I’ve got you.
When Shimon Peres first told me 15 years ago, “John, leadership is very lonely,” I said, “Shimon, how can it be lonely? I’ve got 50,000 people around me.” A few years later, I knew what lonely meant. When things really get tough, you’re by yourself. You make the call. — As told to Diane Brady