Isn't this putting a lot of faith in technology to save us?
The technology is there today. The biggest thing that can go wrong is that management is slow to react to the kinds of change we're seeing and keeps trying to do things the old way. Not enough executive teams know how to pull this off.
What kind of new management mindset is need?
It starts with the idea that you have to measure your resource productivity. It's a management measure that almost no company does well today. Most CEOs can tell you about their return on capital employed or output per employee, but almost none of them can tell you about resource productivity.
If you're the CEO you should be asking your folks, How do I improve resource productivity 5 t0 10% each year? That's a high bar. For the last 20 years we've improved resource productivity only 1% a year compared to more than 3% for labor productivity. You have to think across your business system and figure out dramatic ways to increase your resource productivity. Ask questions such as, How do you take 80% to 90% of weight and cost out of a product, how do you take commodity price and availability risk out of the supply chain, where are there opportunities to double equipment utilization or cut water use by 80% or cut energy use by 40%?
You argue that the resource revolution will help create decent-paying American jobs, but history teaches us that technology and efficiency can destroy jobs.
Every time we have this kind of major economic transition, a group of people will lose their jobs, but the increase in productivity that comes with an industrial revolution will in the long term foster job and wage growth.
What we have in America today is this very interesting paradox. We have a number of fast-growing job categories where you can't find enough workers because the candidates don't have the data-intensive blue collar skills required to operate today's sophisticated equipment. At the same time, some more traditional industrial jobs are disappearing. It's a race. Can we create new jobs faster than we destroy them?