American Management Association
THE YEAR AHEAD: 1985
The Naisbitt Group:
John Naisbitt Chairman
Daniel I^evinas President
Editor-in-Chief: Corinne KuyperS'Denlmger; Director of Publications:
Jerry Kline-, Director of Research: David Beam; Contributing analysts:
Pam Miller, Calvin Troup, Derek Reveron; Research Staff: Betty Sampson,
Julie Eddinger, Mark Bell, Kristen Lund.
The Year Ahead: 1985
draws mostly from the data base
and publications of
The Naisbitt Group,
1101 30th St., N.W.,
Washington, D.C. 20007.
The company’s publications include
The Trend Report,
issued quarterly for clients;
The Bellwether Report,
issued monthly; and
John Naisbitt’s Trend Letter,
a biweekly newsletter.
LC: 85-70017
ISBN: 0-8144-7633-3
© 1984 The Naisbitt Group
All rights reserved.
Printed in the United States of America.
This publication may not be reproduced, stored
in a retrieval system, or transmitted in whole or
in part, in any form or by any means, electronic,
mechanical, photocopying, recording, or other¬
wise, without the prior written permission of
AMACOM, a division of American Management
Association, 135 West 50th Street, New York,
NY 10020.
Printing number
10 987654321
CONTENTS
Introduction 5
In the year 1985-
Unemployment starts to give way to labor shortages.
That’s how it will go for the rest of the century. 8
Americans discover that the United States has a new major
minority group: Hispanics. Blacks move to third place. 13
The challenge for industry becomes not the retraining of
workers—but the retraining of managers. 18
Education technology takes off. The little red
schoolhouse goes ondine. 23
The bypass brings efficiency and autonomy to traveling
and communicating. It’s not just a heart operation
anymore. 28
The San Antonio-Austin Corridor emerges as the
nation’s biotechnology capital. Winning the title is like
having a billion dollars in the bank. 33
Food pollution erupts as our major environmental issue.
What you eat is what you become. 42
The global portfolio is bom. There’s no stopping the
clock on international trading. 48
Computers and telephones finally marry after a lengthy
engagement. Invitations go out this year. 52
Doctors, druggists and delis deliver. If you want to stay
in business, convenience counts. 59
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INTRODUCTION
What’s ahead for America in 1985,
and beyond?
1 his report examines ten trends that will affect the
work and life of most Americans. In almost every case, these
new events or directions have their roots in patterns of change
that first became evident during the early part of this decade.
This is true, for example, in the nation’s current transition from
widespread unemployment to labor shortages, in the rapid
growth of the U.S. Hispanic population, and in the dramatic im¬
pact that technology is having on education.
During the last few years, we also have witnessed the begin¬
ning of the transformation of the U.S. corporation. We highlight
in this report the coming of age of one aspect in the re-inventing
of the corporation: the shift from managers who traditionally
were supposed to have all the answers and to tell everyone what
to do, to managers whose role it is to create a nourishing en¬
vironment for personal growth. Increasingly, we will think of
managers as teachers, mentors, developers of human potential.
It’s essential that corporations that want to succeed under¬
stand this. The key to any organization’s future growth is its
human resources. And in an information society, human
resources are the competitive edge. During 1984 and earlier,
there was much discussion about retraining for the new informa¬
tion age. In the year ahead—and years ahead—the challenge will
be to retrain managers, not workers, for the re-invented, infor¬
mation-age corporation.
It’s also critical that employers anticipate, and understand the
reasons for, the movement from high unemployment to profound
6 THE YEAR AHEAD
labor shortages. The Naisbitt Group’s research-analysts increas¬
ingly see indications that this is happening in scattered parts of
the nation. During 1985,1 think, this movement will become evi¬
dent almost everywhere.
Similarly, the dramatic growth in the U.S. Hispanic population
is rapidly being felt across the nation—especially in megastates
California, Texas and Florida, but in many other sections of the
country as well. During 1985, when Hispanics become our
largest minority group, they will increasingly win recognition as a
political and economic force to be reckoned with.
With the explosion of educational software, classroom robots,
and interactive videodiscs, our schools will never be the same
again. Some think that Johnny will read less, but learn more.
Maybe. One thing is certain: During 1985, he’ll get less of his
learning from books and blackboards, and more from computer
screens.
When executives fly helicopters on business travel, rather than
use commercial airlines—when city and state governments, as
well as major hotels and corporations, install their oWn telecom¬
munications networks, instead of dialing through local phone
companies—when energy-intensive industries, small and large,
install cogeneration systems in order to reduce their dependence
on utilities—and when companies with large-volume travel
demands decide to establish in-house travel offices to avoid travel
agents—that’s bypassing. And bypassing will be one of the buzz¬
words for 1985.
In science, the new frontier is biotechnology. It’s still an infant,
but maturing quickly and already big business. Worldwide, the
biotech industry could be worth $50 billion by the year 2000 —
only 15 years away. Competition among cities eager to be at the
heart of the burgeoning industry is intense. In 1985, as the in¬
dustry reaches adolescence, the San Antonio-Austin region will
emerge as the nation’s biotech capital. The Washington￾Baltimore area won’t be far behind.
With the growing use of pesticides, herbicides, and hormone
and antibiotic treatments of livestock, growers and processors of
our food have laid the groundwork for our next major en¬
vironmental crisis: food pollution. Isolated incidents of
Introduction 7
chemically-caused illnesses began coming to light in recent years,
causing some concern. In 1985, the crisis will erupt.
In view of the megatrend moving the nations of the world from
a national economy to a single, unitary global economy, it became
inevitable that we’d soon have 24-hour, international securities
trading. And with such extraordinary advances in data com¬
munications technology, it rapidly became possible to conduct
round-the-clock trading through electronic channels. We think
1985 will be the year of the global portfolio. At the same time, it
will mark the beginning of the end of the trading floor.
It’s becoming harder to know where communications com¬
panies, like AT&T, end and computer companies, like IBM,
begin. During the past year or so, both kinds of companies have
been discovering how much they have in common. In 1985, the
telephone and the computer will wed. Announcements will be
broadcast from teleports via fiber optics.
Whether your business is health care or hotels, gourmet food
or fried chicken, you’ll be selling more than a service or a product
in 1985. Heightened competition in virtually every market sector
will force businesses to sell more convenience and service as
well.
What does it all mean? It means that 1985 is shaping up to be a
challenging and exciting year.
John Naisbitt
1THE BEGINNING OF
LABOR SHORTAGES
Owners of a Nashua, N. Hamp., delicatessen were
forced to shorten their hours of operation because they couldn’t
find enough workers. With statewide unemployment rates
hovering between 4 and 5 percent, and below 3 percent in
southern New Hampshire cities like Nashua, the demand for
employees exceeds the supply. Service, retail, and fast-growing
high-technology companies in the area suffer from too few ap¬
plicants for too many jobs. Companies are looking for all levels of
skill, from executives and engineers to semi-skilled assembly-line
workers and secretaries. Some companies resort to hiring un¬
skilled workers and training them on the job. Others offer in¬
creased wage and benefit packages, to lure currently-employed
workers from other businesses. Still others have turned to high￾priced headhunters to find technical talent. And one firm now
buses workers back and forth from their homes in Boston, miles
away.
This is by no means an isolated case, limited to New Hamp¬
shire. Evidence is mounting that this country will experience pro¬
found labor shortages, beginning in 1985 and continuing through
the end of the century, and beyond. In Stamford, Conn, high￾skill, high-paying jobs in small high-tech companies are going beg¬
ging. Labor shortages are occurring in suburban New York fast
food chains, malls, restaurants, retail stores, and specialty shops.
On Long Island, job opportunities in office work, durable goods
manufacturing, tourism, and service industries go unfilled. Man¬
power Inc., an employer of temporary workers, reports that it
Labor Shortages Emerge 9
has become increasingly difficult to recruit skilled white-collar
workers in major cities.
This scenario is repeated in Massachusetts, Arizona, Florida,
Texas, and suburban areas surrounding the nation’s capital.
Pockets of high unemployment persist, of course—in the in¬
dustrial Midwest, West Virginia, western Virginia, parts of Penn¬
sylvania and Delaware, among other places. Even there,
however, the unemployment rates fall as companies reach far¬
ther and farther to recruit employees. In 1985 many more com¬
panies will be forced either to bus employees from distant
homes, as New Hampshire firms have begun to do, or to send
recruiters to high-unemployment areas to woo potential
employees.
At present, there is a mismatch between where the jobs are
and where the workers are. In the Washington, D.C. area, for in¬
stance, unemployment rates in the suburbs fluctuate between
3.8 and 2.7 percent, while unemployment rates in Washington
are close to 9 percent. While many city residents could fill subur¬
ban jobs, neither transportation systems nor information net¬
works serve to get people to where the jobs are. Similar situa¬
tions exist elsewhere in the country. In the future, however, it
won’t be a question of matching workers to jobs, there simply
will be too many jobs and too few workers.
With double-digit unemployment still fresh in our minds, the
idea that labor shortages are imminent may be hard to swallow.
How can that happen? Quite simply, the labor force is not grow¬
ing at anywhere near the 2.2 percent yearly growth experienced
between 1965 and 1979, when most baby boomers entered the
workforce. According to recent projections, the labor force will
grow by 21 million between 1982 and 1995—from 110 million to
131 million. Meanwhile, new jobs are being created at a
phenomenal rate. In 1983, 4 million new jobs were created.
Analysts predict another 4 million will have been created by the
close of 1984, and as many as 3 million will be added in 1985. If
new job growth continues at current rates of 3 to 4 million new
jobs a year, or even if growth continues at more conservative
rates of 2 million a year, there will still be more jobs created than
there are persons to fill them.
10 THE YEAR AHEAD
Because of low birth rates in the last two decades, only 1.5
million new workers are entering the work force annually. Over
the next decade that number will become even smaller and the
decrease in available workers steeper. Meanwhile, we’ll con¬
tinue to create jobs, as we move towards full employment. Full
employment, it is important to note, will not be apparent in
familiar statistics. Full employment, traditionally, is achieved at 3
or 4 percent unemployment, taking into account those who are
between jobs, or who have voluntarily left the workforce tem¬
porarily. In the future, full employment will be achieved when 93
to 94 percent of the workforce is employed. The other 6 to 7 per¬
cent will be “truly” unemployed, will have voluntarily left the
workforce, or will be between jobs or careers as we move
towards an era when most of us will change jobs and even
careers three or four times in a lifetime.
Job creation, in fact, is one of America’s great untold stories.
All of the industrialized countries are losing industrial jobs—even
Japan—but only the U.S. economy is creating new jobs at a much
faster rate than “smokestack” industries are losing them. Even
during the much-discussed, extremely traumatic, economic
downturn of 1981-82, our incredible job machine barely stum¬
bled. In Japan, by comparison, jobs have grown by only 10 per¬
cent in the past ten years—half the U.S. rate—and Western
Europe has seen job shrinkage. In Western Europe, there are
now three million fewer jobs—after adjusting for cyclical
unemployment—than there were in 1974.
Where do all those U.S. jobs come from? Not from where one
might expect. Not from where they came from for almost 40
years, through the mid-’60s—government and big business—but
from small and medium-sized businesses. Practically all from en¬
trepreneurial and innovative businesses. Nor were they primarily
high-tech jobs. In fact, only about 10 percent of the jobs created
in the past 10 years have been high-tech jobs. Most are “low￾tech” or even “no-tech.” Inc. magazine’s list of the 500 fastest￾growing, publicly-owned companies, for example, is headed by a
maker of home exercise equipment. ~ " g‘vr￾A study of mid-sized growth companies—those with annual
sales of $25 million to $1 billion annually—conducted by
Labor Shortages Emerge 11
McKinsey & Co., a consulting firm, revealed that the majority of
those companies aren’t high-tech, but manufacturing. But these
mid-sized growth companies grew three times faster than the
Fortune 250—once stalwarts of economic stability—in sales, pro¬
fits, and employment, between 1975-1980. During the steepest
period in this past economic downturn, when Fortune companies
were cutting employment nearly 2 percent every year, the mid¬
sized growth companies added one million jobs to the
economy—1 percent of the country’s work force. The two things
these companies have in common are that they are innovative
and entrepreneurial.
America’s job growth also has been spurred on by billions of
dollars in venture capital available for business starts. Our culture
also supports risk taking. European economies, by contrast, are
more heavily invested in traditional industries and less en¬
trepreneurial, especially the United Kingdom. They’re slow to
move into new technologies that have led to so many new
business starts in this country.
High-tech held, and still holds, a lot of promise for the U.S.
economy, but technology itself doesn’t create many jobs. Cur¬
rently, high-tech accounts for only 2.8 percent of U.S. jobs, and
will be responsible for no more than 5 percent of new jobs during
this decade. However, the “intelligent application of technology”
will generate hundreds of thousands of jobs. The industrial
economy rested on the automobile, but not all of us worked
directly with automobiles. Nonetheless, our lives were
significantly altered by them. Similarly, the information economy
rests on the computer, but not all of us will work directly with
computers. Our lives, and our jobs, however, will certainly be
changed because of them.
If we aren’t all going to be working in high-tech industries,
where will we work? Between 1972 and 1982, 6.7 million new
jobs—a 55-percent increase—were created in information¬
intensive occupations, such as health, education, business, legal
services, and financial services. Finance, real estate and in¬
surance positions rose by 1.4 million —a 37-percent in¬
crease—during the same ten-year period. Professional and
managerial workers were up 45 percent. Occupational groups for
12 THE YEAR AHEAD
college-educated workers, such as accountants, computer
specialists, engineering and science technicians, engineers,
health technologists and technicians, lawyers, and registered
nurses, accounted for over half the 5.4 million rise in professional
and technical employment between 1972 and 1982.
Bank officials and financial managers, up to 70 percent, were
the fastest-growing managerial occupations. Health ad¬
ministrators nearly doubled in number, and sales representatives
in everything from real estate to wholesale trade grew in number
as well.
The health industry is booming, creating jobs not only for
nurses, but also for dietitians, therapists, health technicians, ad¬
ministrators, and health aides. In fact, health technologists and
technicians are among the biggest gainers both in numbers and
growth rate. The demand for persons skilled in the use of
sophisticated diagnostic and therapeutic equipment added
255,000 new jobs. Therapists increased by 85 percent, and the
number of dietitians also grew quickly, from fewer than 35,000 in
1971 to more than 60,000 in 1982.
As had been predicted by just about everyone, jobs for food
service workers, secretaries, clerical workers, custodial
workers, and general office clerks increased by hundreds of
thousands. They continue to rise. While much was written a year
or more ago about the inevitable creation of a two-tiered work
force—with highly-skilled individuals working in high-paying jobs,
unskilled persons working in low-paying jobs, and the middle
disappearing—that concern seems to have ebbed somewhat.
While it is true that the number ofjobs being created currently is
weighted heavily on the no-skill, low-pay side, there is evidence
that many service jobs (health technicians, for example) are being
“upgraded” by the nature of the tasks being performed. Fur¬
thermore, as the labor shortage grows more serious, wages will
have to be adjusted upward to attract workers.
The middle class isn’t disappearing, it’s being redefined.
US. H1SPANICS WILL
BECOME OUR MAJOR
MINORITY GROUP
/According to census figures, one in five residents of
California, the nation’s most populous state, is Hispanic. One in
five residents of Texas, our third most populous state, is
Hispanic. And one in ten of New York’s residents, the second
most populous state in the nation, is Hispanic. Maybe. Their
numbers in those states and throughout the country may well be
higher. Although official and unofficial counters, from the Census
Bureau to a host of private research firms, are busy tabulating
numbers of Hispanics, there is no consensus on just how large a
group they comprise. But virtually all agree: America’s Hispanic
population soon will outnumber blacks to become the majority
minority group. We expect this to happen by the end of 1985.
Estimates of Hispanics in this country range from 18 million to
26 million, with their numbers increasing by 7 percent a year (a
doubling every 10 years) as a result of immigration and a birth
rate that is twice as great as that of Anglos or blacks. Some
demographers estimate that by the year 2000, Hispanics will ac¬
count for 50 percent of the population in California and the
Southwest, and will exceed 50 million nationwide.
As much interest as there is in how many Hispanics live in this
country, there is equal if not greater interest in—and more
speculation about—the impact they’ll have on markets for prod¬
ucts and services, on politics, and on economic development
generally.
Surveys of Hispanic’s income levels, buying habits, political
14 THE YEAR AHEAD
persuasion, and cultural background have told us little that we
didn’t already know, or could not have guessed. They told us
that Hispanics come from diverse cultural backgrounds, have an
average income somewhat lower than Anglos, and higher than
the average black family income. Their educational backgrounds
vary from no high school diploma to professional degrees. They
are, like the rest of us, interested in upward mobility and see
education as a means to achieve that mobility. And they’re
Republican, Democrat, and neither.
Sounds suspiciously like the rest of us. They have just one
common link: language. Although there are many Spanish
dialects, and each group is true to its own, immigrating Spanish¬
speaking families continue to speak Spanish in the home and feel
strongly that their children should speak their native tongue.
Consequently, advertising and marketing campaigns are being
designed with a heavy Spanish accent. Many also are being
targeted through Spanish-language media.
The number of advertising firms that specialize in marketing to
Hispanic consumers is growing rapidly. Ten years ago such firms
were scarce. But with spending power estimated to be from $30
billion to $80 billion, interest in targeting Hispanic buyers has
peaked. More than 100 advertising/marketing firms consider
themselves Hispanic-market experts. They range in size from
one-person operations to multimillion-dollar businesses. Seven of
the top 400 Hispanic-owned businesses in the U.S. are advertis¬
ing agencies dealing exclusively in the Hispanic market. Four are
in New York: Publicidad Siboney Inc., with 1983 billings of $72
million; Font & Vaamonde Inc., $21 million; Conill Advertising,
$18.8 million, and Castor Spanish International Inc., $15 million.
The other three of the top seven are in major Hispanic market
areas: Beverly Hills (Los Angeles), San Antonio, and Miami.
Although to date most of the growth in Hispanic-market adver¬
tising has involved Hispanic-owned agencies, several major New
York agencies in recent years have created Hispanic divisions to
keep billings they otherwise would have to subcontract. Among
those that added Hispanic divisions are Young & Rubicam, Ogilvy
& Mather, J. Walter Thompson and Ted Bates Worldwide. In the
year ahead, others are certain to follow.
Hispanics 15
Also in 1985 we can expect to see advertisers significantly ex¬
pand their Hispanic marketing budgets. So far, the 25 leading
companies that advertise their products to the Hispanic market
allocate only a small share of overall advertising budget—but
even that amount is significant. Philip Morris Inc., for example,
earmarks $6.1 million for Hispanic advertising out of a $501
million total ad budget. McDonald’s spends $5.4 million out of
total advertising expenditures of $265.5 million. And Procter &
Gamble allots $4.5 million of its $726 million advertising budget to
target Hispanics.
Rates of growth, however, tell the real story. Last year, the
25 top companies spent $229 million for advertising directed to
Hispanics, up from $166 million in 1982. The total is expected to
reach $300 million in 1985.
HISPANICS WILL GAIN
POLITICAL GROUND IN THE
YEAR AHEAD
Conservatively estimated to number 45,000, Hispanics in
Boston are on their way to becoming that city’s biggest minority
group. High birth rates and continuing immigration makes
Boston’s Hispanic population the fastest-growing minority group.
Mayor Raymond Flynn has a sizable bilingual staff. Smart move.
Hispanics are emerging as a crucial voting bloc in many
neighborhoods. Already, they are felt as an influential or swing
vote in white-on-white contests. Although Mike Dukakis easily
beat Ed King statewide in the ’82 gubernatorial primary, it was
tight in Boston. Dukakis won Boston by less than the number of
Hispanic votes cast. Hispanic votes kept him from losing to King
in several key areas.
Political analysts believe that coalition politics, in the not-too￾distant future, will elect a Hispanic mayor, as has happened in
Denver and San Antonio. There are signs that such a coalition
has already met with some success. Working with blacks in one
district, a Honduras-born woman won a school committee seat to
become the first Latino to hold elective office in Boston. Analysts
caution, however, that as Hispanic numbers rise, the city’s
16 THE YEAR AHEAD
black-Hispanic coalition could disintegrate. This has happened in
other cities, notably Miami, where antagonism arose between
blacks and the fast-growing Hispanic sector.
Henry Cisneros, perhaps the nation’s best-known and most
popular Hispanic politician, is mayor of San Antonio, the 10th￾largest city in the U.S. He has built a pro-growth consensus on
an ethnic diversity in a city once characterized by tension be¬
tween Latino barrios and an Anglo elite. Last year he was
reelected with 94 percent of the vote.
By 1990, the Hispanic population.in South and West Texas will
account for 65 percent of the population in those areas, wielding
political clout in the state’s legislature and significantly influencing
economic and educational structures across the state. Hispanic
voters already have demonstrated their influence in major Texas
elections. In 1982, 80 percent of the Hispanic vote went to
Democrat Mark White, giving him his majority over incumbent
William Clements.
Hispanic activist organizations are successfully mobilizing
Mexican-Americans from the Rio Grande to Los Angeles.
Groups like Valley Interfaith, based in Wesleco, Texas, are
teaching Hispanics how to exercise their political muscle. Valley
Interfaith has spent a considerable amount of energy registering
Hispanic voters in Texas—70,000 so far, with ambitions to
register an additional 100,000 by November 6. Communities
Organized for Public Service, an activist organization working to
improve conditions for Hispanics in San Antonio, won a $500
million federal construction grant to solve drainage problems in
the city’s predominantly Mexican-American west side. The
group also helped change the at-large form of representation on
the city council, which paved the way for Henry Cisneros’ over¬
whelming victory.
Nationally, Hispanics wield more power than ever, and are be¬
ing acknowledged as a force to be reckoned with. Thirty Hispanic
delegates attended the 1964 Democratic National Convention; at
the 1984 convention there were 271. Receptions hosted by
Hispanic groups were well-attended by political rising stars and
established candidates alike. With 200 delegates and alternates in
attendance at the Republican National Convention, Hispanics
Hispanics 17
were fairly well represented there, although there was no
Hispanic caucus. Pro-Reagan forces touted the 35 to 40 Hispanic
appointments made during this administration, and Republicans
expect to spend $2 million nationwide on a media campaign, in¬
cluding bilingual commercials, on voter registration and on get￾out-the-vote drives to win Hispanic votes.
Hispanics represent a political force certain to influence the
1984 presidential election. However, it is at the local and state
levels where they’ll not only influence the outcome of some elec¬
tions, they’ll determine the direction government takes in the
year ahead and beyond.
HISPANIC BUSINESSES HELP
BUILD LOCAL ECONOMIES
One thousand delegates attended the annual convention of the
U.S. Hispanic Chamber of Commerce in July in San Antonio.
They represented 30,000 members spread across the country.
According to chamber estimates, there are 360,000 Hispanic￾owned businesses in the United States. That number is projected
to be 600,000 by 1987, with $18 billion in sales.
Once thought to be strictly “mom and pop’’ operations,
Hispanic businesses run the gamut from Secaucus, N.J.-based
Goya Foods Inc.—with $245 million in sales, the nation’s largest
Hispanic-owned business—to five-year-old Satelco Inc., a $25
million-a-year telecommunications company. Although Hispanic
businesses are concentrated in California, Texas, and Florida,
they can be found in every state.
Not surprisingly, California leads in Hispanic-owned
businesses. But Texas is a close second and soon may surpass
California in number and in total dollars in sales. With 83,400
Hispanic-owned enterprises, Texas is home to 23 percent of all
Hispanic-owned firms, accounting for $4 billion in sales this year.
In 1985, the number of Hispanic-owned businesses and their con¬
tribution to the economic well-being of Texas, as well as many
other states, will increase dramatically.
CHALLENGE FOR THE
’80s: RETRAINING OF
MANAGERS, NOT
WORKERS
Last year, the Federal Reserve Bank of Atlanta asked
Wall Street analysts to name the Southeast’s top companies. The
same request was made of the Fed’s 40 or so branch directors.
In both cases, their only guideline was to name “companies that
were respected, will last for a long time, have some kind of
enlightened management style, and have good growth of sales
and earnings.” The requests resulted in a list of about 100
companies.
Researchers then selected from the list only those that ranked
first or second in their industries in five-year compound growth in
net sales, return on assets, and return on equity. Of the 100, 22
companies made the list of premier Southeast firms. Companies
named ranged from Coca-Cola, with $6.8 billion in annual sales,
to Intelligent Systems, with $90 million in sales, and from 4-year￾old Nissan to 107-year-old Barnett Banks of Florida. Manufac¬
turers and high-tech companies made the list. So did super¬
markets and financial institutions.
If it wasn’t product or service area that linked them, what was
it?
Most shared a commitment to decentralized decision making
and generally informal management. Most asserted that
employees in their company had a sense of “mission.” Many en¬
couraged employee stock ownership. All of the companies
chosen demonstrated a commitment to their most critical
resource—their employees. All had found a way to motivate the
Retraining Managers 19
rank-and-file workers as well as the managers. All had discovered
one of America’s best kept secrets: workers are aching to make a
commitment, if given the freedom to do so.
In an information society human resources are the competitive
edge. They’re the key to any organization’s growth. On one level
this has always been true and we’ve always known it—or given lip
service to it. But now we have to understand it at a deeper dimen¬
sion, and it involves a new respect for the individual. Business
must be aware of the fact to survive in an age where information
and innovation are the critical elements, an emphasis on human
values is essential. Employees must feel they are part of the solu¬
tion, not the problem—that their participation has value.
Evidence is mounting that business is catching on. Across
America companies are being re-invented around people. Many of
the companies in the Fed’s study have demonstrated their com¬
mitment to their employees in a variety of ways. Corporate
policies at Home Depot (with $256 million in sales) often originate
in meetings between small groups of employees and the chairman
of the board, who visits each of the company’s 21 stores at least
once every three months. At Nissan and Nucor, there are no
reserved parking spaces for officers. At Hayes Microcomputer
Products, there are no executive offices; everyone, including
founder Dennis Hayes, works in a cubicle with no doors. And at
Publix Super Markets of Florida, there is no organizational chart
or policy manual, and most employees are stockholders.
IN RE-INVENTED CORPORATIONS,
MANAGERS ARE MENTORS
In the re-invented corporation, top-down, hierarchical, au¬
thoritarian management styles have given way to a networking
style of management, where people learn from each other
horizontally and where everyone is a resource for everyone else.
The baby boomers grew up on the networking style in the anti¬
war movement and the women’s rights movement, and they’re
now carrying that style into the business community. In the re¬
invented corporation, we are shifting from “manager as order
20 THE YEAR AHEAD
giver" to "manager as facilitator.” In the ’80s, we are moving
from the manager who is supposed to have all the answers and
tells everyone what to do, to the manager whose role is to create a
nourishing environment for personal growth. We have to increas¬
ingly think about the manager as teacher, as mentor, as resource,
as developer of human potential.
Quality circles, which have been in place in many companies for
some time now, are one way in which workers and managers learn
how to work cooperatively to solve problems. ‘ ‘Invented’ ’ by two
U.S. management theorists hired by the Japanese government in
the 1950s, the concept was imported in the late 1970s and widely
adopted by manufacturing companies. More recently, the concept
has spread to other organizations including hospitals and financial
institutions. It has even inspired a national organization: the
Cincinnati-based International Association of Quality Circles (IA￾QC), formed in 1978, now has 10,000 members representing
4,000 companies.
InterFirst Bank/Dallas instituted a quality circle program two
years ago. Since then, the program has grown from 5 to 28
circles. In Fort Worth, General Dynamics, Standard Meat Co.,
and Miller Brewing have quality circles for both white- and blue￾collar workers. General Dynamics has over 100 circles, over half
of them in offices and technical areas, including seven engineering
circles. Quality circles can work in any company, in any industry as
long as they have the support ofmanagement and employees. Said
one LAQC chapter services manager, “The single greatest cause
of failure is a lack of middle-management support, where super¬
visors see quality circles as a threat to their own authority or
autonomy. The second biggest cause is the lack of support by top
management.’ ’
COMPANIES ENCOURAGE
PARTICIPATION
According to a survey, 14 percent of U.S. companies with
more than 100 employees have developed work reform programs
to encourage participative management. A government study
found that 44 percent of companies with more than 500 workers
had groups in which workers and supervisors discussed opera-
Retraining Managers 21
tions. Participative management is an idea whose time has come.
In companies where commitment to shared management is high,
productivity has increased, absenteeism has decreased, and both
workers and managers express an overall sense of well-being.
Even companies that have shied away from participative
management are making an attempt to improve the quality ofwork
life of their employees. There are companies that offer on-site ex¬
ercise facilities, on-site day care, or day care assistance, diet and
stress management workshops, and a variety of other employee￾assistance programs that recognize the value of an organization’s
human resources and strive to improve work life. In the year
ahead and beyond, we will witness an even greater emphasis on
developing human potential and nurturing growth.
ESOPS: THE ULTIMATE
QUALITY CIRCLE
In California, hundreds of companies have brought their
employees into ownership roles in recent years. Hundreds more
will follow. Encouraged by federal tax incentives, state legislation,
and a growing belief that employee-owners make better workers,
Employee Stock Ownership Plans (ESOPs) are flourishing.
Employee ownership is an old idea whose time has come. In July,
President Reagan signed a bill that raised the stakes even higher
— creating a win-win situation for owners and employees when
companies are converted in part or wholly to employee owner¬
ship. Under provisions of the law, company owners are allowed to
defer taxation by selling at least 30 percent of their stock to
establish an ESOP and reinvesting in another company’s
securities within one year. Another provision reduces by 50 per¬
cent the tax that lenders pay on profits earned from loans to help
establish ESOPs. Said Corey Rosen, director of the National
Center for Employee Ownership in Arlington, Va., “The effect
will be to at least double the number of plans in the next few
years.’’
Currently, there are 6,000 companies owned in large part or
outright by employees. Among companies with ESOPs are Cable￾Data, a manufacturer of billing equipment for the cable television
22 THE YEAR AHEAD
industry; San Francisco-based Record Factory — which is
100-percent employee-owned, and which has expanded from 11
stores to 32 stores since employees and managers bought the
company from its founder; and Sacramento-based American
Recreation Centers, which operates bowling alleys in California
and Texas.
Newark, N.J.-based People Express, is 100-percent employee￾owned. The airline has 3,500 employees, a net worth of $200
million, and annual sales of $500 million. Publix Super Markets,
based in Lakeland, Fla., also is 100 percent owned by its
employees. The supermarket chain has 35,000 employees, and a
net worth of $314 million. United Parcel Service, also 100-percent
employee-owned, based in Greenwich, Conn., employs 150,000.
ESOPs work. Until recently ESOPs were a way for companies
to drop unprofitable divisions, and for employees of those divi¬
sions to salvage their company and, of course, their jobs. Cor¬
porations were spared the expense of dismantling operations,
employees avoided going on the unemployment rolls. In many
cases, the result has been a return to profitability for the ailing
divisions. Hyatt-Clark Industries, for example, became an
employee-owned company when General Motors announced it
would close the ball-bearing plant. Today, Hyatt employs 1,550,
compared to 800 in 1981 when the buy-out went into effect, and is
operating in the black. In 1985, the number of employee-owned
companies will experience a dramatic jump, because they make
good fiscal sense and because they work.
TECHNOLOGY TO
TRANSFORM THE
CLASSROOM
Education as entertainment” is fast becoming the
modus operandi for America’s schools. Rapid technological ad¬
vances are turning the classroom into centers of electronic
gadgetry where the emphasis is as much on “gee whiz”
technology as it is on geography. There is an emerging
philosophy that holds: if information is not entertaining, it won’t
be absorbed—not by preschoolers or postgraduates.
In 1985 a mind-boggling array of educational software, interac¬
tive videodiscs, and classroom robots will be introduced. Personal
computers will turn living rooms into classrooms. Hundreds of
thousands of adults will return to school via electronic university
programs designed for home computers, cable television, or
work-site educational extension programs.
The age of electronic education is upon us.
Henson Associates, creator of the Muppets, now sells a com¬
puter keyboard especially designed for children who are learning
the alphabet. Normal keyboard arrangements are small and con¬
fusing because letters are not in alphabetical order, so Henson
designed one with larger keys and letters in order. The keyboard
is illustrated with a color palette that children can touch to change
the screen color and a numbered ruler with which they can in¬
crease the number of Kermits or other figures. A ‘ ‘help’ ’ key is il¬
lustrated with a picture of Miss Piggy tied to a railroad track.
When the key is struck, Kermit appears with a picture of the key
pad and demonstrates various functions.
24 THE YEAR AHEAD
A growing number of companies hope to cash in on the com¬
puter craze for preschoolers. Henson Associates, with Children’s
Television Workshop (producers of Sesame Street), also are put¬
ting Kermit, Big Bird and the gang on floppy diskettes. Quaker
Oats Co. ’s toy subsidiary, Fisher-Price, is putting its logo on a line
of educational computer games. And CBS Software, a subsidiary
of CBS Inc., began selling seven programs for preschoolers
earlier this year.
Whether computer programs for preschoolers actually give
children a head start on their peers remains to be seen, but the
programs are extremely popular. According to Talmis Inc., a
Chicago-based market research firm, an estimated 30 percent of
the $94 million home education software market was spent on pro¬
grams for children under age 7 last year. They projected that the
volume will double by the close of 1985.
Turtle and Hero are robots—mobile computers in an innovative
program for students in the Greenville, Ohio, school district.
Students from elementary to junior high learn the languages and
inner workings of computers by programming robots to speak
French, draw designs on the floor, and retrieve objects from
across the room. So far, use of robots as secondary education
tools is rare, but in a few years they’re likely to be as common as
desktop computers.
ROBOTS IN CLASSROOMS
TURN HEADS AROUND
Will robots create as much controversy as computers in the
classroom? Probably. Even as Digital Equipment Corp. was sign¬
ing an agreement with New Hampshire state officials to sell per¬
sonal computers at a 50-percent discount—toward the goal of put¬
ting 3,000 PCs in elementary classrooms by the end of 1985—and
IBM was reaching an agreement with Boston’s school system to
sell 800 IBM PCs & PCjrs, the controversy was heating up.
Similar computer discount sales have been made across the coun¬
try. Virtually every major computer maker has made a foray into
the classroom, yet the controversy rages on: Are computers
valuable educational tools or dehumanizing machines that threaten
Education Technology Takes Off 25
our nation’s creativity?
(Meanwhile, educational software programs are being sold as
fast as they can be written, and everyone involved—from base¬
ment entrepreneurs to McGraw-Hill, from teachers turned
designers to IBM — hopes to ride the technology tide to big
profits.)
That debate is certain to escalate in the year ahead as
technology takes another giant leap forward. Interactive laser¬
discs, heralded as the most exciting aspect of the home-video
market, will have as profound an impact on educational markets as
they will on entertainment markets. Laserdiscs use a laser beam
oflight to pick up coded signals embedded in the disc surface. The
picture is the sharpest available for home equipment, and its
sound system is as good as most audio-only stereo components. It
is interactive capability, however, that makes laserdiscs exciting
educational tools. With two audio tracks, slow motion, fast mo¬
tion, freeze-frame, and chapter-frame search to find at random
any one of the 54,000 individual frames on a standard disc, laser¬
discs represent the perfect “teach-yourself” tool.
Madison, N.J.-based Video Vision Associates has produced a
six-volume “Space Disc” series for use by schools and libraries.
Each volume contains thousands of photographs and extensive
printed-image directories of the entire U.S. space mission. The
National Air and Space Museum has completed “Archival
Videodisc 1,” first in a series of ten two-sided encyclopedias sold
by mail. Laserdiscs tell the history of flight through black-and￾white and color stills of aircraft from the museum’s archives. Op¬
tical Programming Associates-MCA, in Universal City, Calif., of¬
fers a wide variety of instructional interactive laserdiscs from
which one can learn a range ofskills from belly dancing to the mar¬
tial arts. Whether used for serious home study or just for fun, in¬
teractive laserdiscs are amazing technical achievements. They
could profoundly alter the way we educate ourselves.
The University of Houston (UH) is going on-line. Soon UH
students will be able to access the library, receive electronic mail,
find out about upcoming events, and know when a professor is ill
and class is canceled — all without leaving their dorm rooms.
Digital Computer Corp. will make it possible through the creation
26 THE YEAR AHEAD
of one of the nation’s largest and most advanced computer¬
intensive educational environments. Previously, digital networks
were created at the University of Pennsylvania and the University
of Pittsburgh, but neither matched the magnitude of the planned
UH network. Digital sees the project as an experiment and large￾scale prototype it hopes will be repeated on campuses around the
country.
IBM plans to give the University ofWashington $8 million worth
of computer equipment over the next three years. Five hundred
personal computers and two mainframes will be used to “explore
new ways oflearning, teaching, and doing research.’’ Earlier, UW
was selected as one of 24 members of the Apple University Con¬
sortium through which Apple computers are resold to full-time
students, faculty, and stafffor about half price. The UW was one of
a dozen universities to which IBM donated equipment. The
Massachusetts Institute of Technology (MIT), Princeton, and the
University of California at Berkeley, also received IBM-donated
equipment. Computer manufacturers have been trying to send
their minicomputers to college for years, not only to improve their
share of an incredibly competitive computer market, but also to
encourage users to write new programs and discover new applica¬
tions. Users have the best information on what works in practical
application.
Carnegie Mellon University plans to make a microcomputer
available to every student on campus by the fall of 1986. Richard
Cyert, Carnegie Mellon’s president, believes computers will
facilitate the educational process to the point where students will
be able to complete in three years what has always taken four. If
educational technology continues to develop at its dizzying pace,
many students may not spend so much as a single semester on
campus.
There’s also the Electronic University, described as a cross be¬
tween a small college and a community night school. Created by
TeleLeaming Systems Inc.—which was founded by a former con¬
sultant with Atari Inc. and designer of one of the first hand-held
computers — Electronic University has no campus, no football
team, no lecture halls. Students enroll in courses, receive
lessons, and submit homework over the phone lines via a modem
Education Technology Takes Off 27
attached to their home computers. Initially, 177 courses were of¬
fered. By 1985, 500 courses will be listed in the school catalogue,
from “U.S. History” to “The Wines of France.”
TeleLeaming also is exploring ways of providing many people
with quality education. In association with the Corporation for
Public Broadcasting (which has received funding from Annenberg
Publishing), TeleLeaming will set up a system combining TV
classes, college credits, and computer communications. So far,
the University of Wisconsin, University of Nebraska, and Califor¬
nia’s San Diego University have expressed interest in par¬
ticipating in programs that would allow students to gain college
credits at home, turning their homework assignments in via home
computers.
THE EDUCATION REVOLUTION
Education in America is in the midst of a revolution. Many critics
are up in arms, concerned that technology will take the human in¬
teraction out of education, isolating people from one another.
Some warn that we will become a nation of technicians—skilled in
the use of electronic equipment but incapable ofmeaningful human
interaction. That won’t happen. Americans won’t let it.
What will happen is that educational technology will allow
classroom teachers to concentrate on less tangible, critical skills
such as thinking, reasoning, and basic communications. While the
technology exists to allow us to go from preschool to postgraduate
work without ever leaving our living rooms, it isn’t likely that any
of us will opt for that route. Technology just widens our options. It
is more likely that we will use technology as a tool to free teachers
and administrators from some of the more mundane tasks of
education. With technology performing tedious tasks, like record
keeping, or drill and practice sessions that are more entertaining
via computer than they are with flash cards, teachers will have
more room for creativity.
With more and more technology being introduced into the
classroom, expect to see a resurgence of interest in teaching art,
music, literature and drama. We will need some high-touch ballast
in the high-tech classrooms of the future.
YEAR OF THE BYPASS
Bypass, a term that is commonly used to describe a
heart operation, is being given a new definition by businesses
across the country. When corporate America buys helicopters
and light planes to avoid airport congestion and time delays, they
are bypassing major airlines. When energy-intensive businesses
like paper and pulp companies or chemical manufacturers build
cogeneration facilities to generate steam and heat, they are
bypassing local utilities—once monopoly service providers. And,
when cities, states and companies build their own communica¬
tions systems for voice and data transmission, they are bypassing
local Bell operating companies. Bypassing is saving American
businesses thousands of dollars. Bypassing is big business. In the
year ahead, we expect businesses large and small to use imagina¬
tion and creativity in developing new ways to bypass monopoly
service providers to save time and money.
Corporate executives with offices in suburbs surrounding New
York City, or with plants in locations some distance apart, are in¬
creasingly using helicopters for business travel to the city or be¬
tween plant sites. In fact, helicopters are the fastest-growing
segment of civil aviation in use and numbers being manufactured.
General aviation helicopters flew 2.5 million hours in 1979. In
1984, they flew 2.9 million hours. And by 1995, experts predict,
they will fly 4.5 million hours. Much of that air time will be for
business travel. Eventually, the entire Northeast Corridor,
where helicopters are in greatest use, will be linked by a network
The Bypass 29
of helicopters serving the business community.
Helicopters are expensive. Initial start-up costs for private
operations and operating costs are high, but companies using
helicopters insist they are essential. Because helicopters can
take off and land almost anywhere, business executives can
bypass congested airports, saving time in the air and on the
ground. Time is money.
IBM, based in Armonk, N.Y., Hartford, Conn.-based United
Technologies, and AT&T are among the corporations that have
come to rely on helicopters to ferry executives from suburban of¬
fices to meetings in Manhattan. Other companies, farther from
New York, use helicopters to fly officers and guests from plant
locations to New York City accommodations. Mack Trucks Inc.,
a major exporter of heavy trucks, is based in Allentown, Pa., but
when foreign clients come to the United States, the company
puts them up in luxury hotels in Manhattan, and then helicopters
them to their Allentown offices. Maynard, Mass.-based Digital
Equipment Corp. uses a fleet of six helicopters to shuttle
employees and customers among 13 office buildings and plants it
occupies in the Boston suburbs and eastern Massachusetts.
More and more businesses are moving to New York’s sur¬
rounding suburbs. Now when new plants or office complexes are
considered, plans include helicopter-landing facilities. Merrit 7,
for example, a business complex under contruction on 42 acres in
Norwalk, Conn., will include a hotel and offices for dozens of
companies—and a helipad. Although the complex is only one￾quarter complete, the helistop is already in place and in use.
Noted John Crosby, vice president of Albert D. Phelps Inc.,
which is developing the complex, ‘ ‘A helistop has become one of
the more important amenities.”
Eighteen months ago, the Federal Aviation Administration set
up a special “rotorcraft” office to deal with the problems certain
to grow out of increased use of helicopters. Air-traffic congestion
is an obvious problem, and more landing sites need to be
developed. Of the Northeastern states that have experienced
rapid increases in helicopter traffic, New Jersey has done the
most to plan for orderly growth. Officials there currently receive
10 requests for heliports a year.
30 THE YEAR AHEAD
There is a growing consensus that service by the nation’s ma¬
jor airlines has deteriorated since deregulation. Delay-causing
traffic congestion frustrates corporate America to the point
where it is bypassing major airlines altogether. Buying or
chartering helicopters or smaller private planes saves businesses
hundreds of hours and thousands of dollars.
Saving money by bypassing major airlines is a powerful incen¬
tive for major corporations as well as smaller businesses. In fact,
saving money is the impetus behind the development of most
systems designed to bypass service providers—and businesses
across America are using imagination and innovation to bypass a
wide range of services from utilities to travel agents.
Using coaxial cables, microwave transmitters and satellite sta¬
tions, corporations bypass local Bell operating companies by set¬
ting up in-house telecommunications networks. They’re moving
data from computer to computer, carrying calls from office to of¬
fice within the same city, and transferring calls directly to non￾Bell, long-distance carriers. In New York City, Citicorp runs its
private telecommunications network under the streets.
Westinghouse Electric Corp built a $26-million microwave
transmission system connecting 12,000 phones at 20 Pittsburgh￾area facilities. And in Las Vegas, a private network connects
large hotels with long-distance companies. States and cities also
are bypassing local phone companies. Both New York State and
New York City have private telephone networks connecting
government offices. And South Carolina plans to build a
$26.7-million microwave system to connect state offices. State
officials believe they will save as much as $100 million over 20
years.
LOCAL PHONE COMPANIES
BYPASS THEIR OWN NETWORKS
If industry analysts are right, the 2 percent of American
organizations that bypassed local phone companies in 1980 will
mushroom to 11 percent by 1990. Local Bell operating com¬
panies could lose as much as $9 billion. It is too soon, however,
to sound the death knell. Many local phone companies are taking
the lead in building private lines for businesses that bypass their
The Bypass 31
own local network. Illinois Bell, a subsidiary of Ameritech (one of
Bell’s seven siblings), for example, plans to install fiber optic
lines to connect ‘ ‘just about every major building’ ’ in downtown
Chicago, giving it a technological edge in providing bypass loops
for business. Furthermore, industry insiders insist that the local
Bell companies will soon be deregulated, perhaps as early as
1985. Once deregulated, they can compete aggressively in the
telecommunications market.
Meanwhile, bypassing saves corporations big bucks.
Westinghouse expects to save $66 million in local phone charges
over the next ten years—a startling 28-percent return on its in¬
vestment. With such savings possible, more companies are cer¬
tain to follow.
BYPASSERS PUT THE BITE ON
ELECTRIC UTILITIES
Efficiency, economics, and greater autonomy are encouraging
energy-intensive industries to bypass local utilities. Cogenera¬
tion—an old idea for which new technology has been
developed—allows paper and pulp companies, oil refineries,
chemical producers, and food processors to provide electricity
and steam for factory operations while lessening their
dependence on local utilities. Cogeneration provided 7 percent of
the nation’s electricity this year, and is projected to produce 12
percent by the end of the century—more than nuclear power
plants provide today and enough to light up all of New York State
and New England.
Dow Chemical Co.’s recently completed cogeneration facility
in Freeport, Texas, generates one million kilowatts of electricity
and enough steam to manufacture chemicals, with power left
over to sell to Houston Light & Power Company. (Under the
Public Utility Regulatory Policy Act, utilities must buy excess
power from private generators, whether the utility needs the
power or not.) A Y.M.C.A. in Freehold, N.J., saves $50,000 a
year in utility bills with a $130,000 natural gas-powered engine
that generates 70 percent of the Y’s electricity and all of the heat
for its rooms, showers, and swimming pool.
32 THE YEAR AHEAD
Virtually every major energy-using industry is looking into
cogeneration, according to Thomas S. DePre, a vice president of
Becker Paribas Inc., a New York-based banking firm under¬
writing a number of these ventures. In most cases, particularly
for energy-intensive industries such as paper and pulp, oil refin¬
ing and chemical manufacturers which need both electricity and
heat at very high temperatures, cogeneration allows them to
meet both their electricity needs and their heating needs for the
same fuel costs. Cogeneration saves money. Lots of it.
Interest in cogeneration has created an entirely new equipment
industry,with sales expected to reach $5 billion by the end of the
century. New technology also is opening the market to less
energy-intensive facilities, like hospitals, hotels, banks, schools,
and restaurants. Packaged cogeneration systems are available
that allow units of less than 1,000 kilowatts to be installed at
reasonable costs. Sales of these systems have grown rapidly,
from fewer than five nationwide in 1981, to more than 200 this
year.
Bypassing is big news. Technological innovations help many in¬
dustries loosen their ties to once-exclusive service providers. A
host of on-line, travel-related data bases with interactive
capabilities are now available to personal computer users. A
range of services—from flight reservations and ticket orders to
general information about currency rates of exchange, some
courtesy of major air carriers—are handled via electronic infor¬
mation networks. Companies with large volume travel demands
save money by bypassing travel agents and getting the best
possible ticket prices directly from airlines. Travel agencies may,
in fact, become the biggest users of on-line travel services. That
step requires a shift in focus for agencies, from considering
themselves providers of a service to becoming information pro¬
cessors, taking advantage of on-line travel service databases.
Economics alone would be incentive enough for most corpora¬
tions to bypass service providers, but achieving greater
autonomy is an equally powerful incentive. The less one relies on
others, the less tied he is to outside systems, the better able to
control use and flow of everything from electricity to travel time.
In this area of self-reliance, bypassing was probably inevitable.
£
SAN ANTONIO—AUSTIN
^CORRIDOR:
U.S. BIOTECHNOLOGY
CAPITAL
When Mark Chandler, president of Inland Labs,
decided to move his Fort Worth operations to a place more con¬
ducive to the expansionist dreams of a “test tube en¬
trepreneur,” he didn’t have far to go. The firm, which sells
biological research supplies and soon will produce an anti-cancer
substance, moved to Austin.
Chandler moved south to take advantage of Austin’s “superior
attitude toward developing a biotechnology industry.” “Bankers
in Austin and San Antonio seem to be more willing to support
biotechnology businesses,” he says.
To an outsider looking in, that decision wouldn’t appear to
make much sense. An absence of corporate and individual income
taxes is as beneficial to companies and their employees in Fort
Worth as it is to firms in Austin. And while quality of life plays an
important role in any company’s decision to relocate, it wasn’t
the rolling Hill Country or Austin’s proximity to the Colorado
River that persuaded Chandler to move. Nor was it the fact that
Microelectronics Computer & Technology Corp. (MCC), a
research consortium of 18 computer companies which has as a
goal to “beatJapan in advanced technology,” chose Austin as its
headquarters over 56 other U.S. cities. Chandler chose Austin
simply because he believes Austin will become the nation’s
biotechnology capital, and biotechnology companies are his bread
and butter.
Smart move. Business leadership and state government of-
34 THE YEAR AHEAD
ficials—with Governor Mark White carrying the banner—have
forged a new partnership. They are working cooperatively to
wean Texas from its dependence on oil, which by all accounts
could be depleted in as few as nine years. Hanging their hopes on
technology—computer and medical—leadership in Texas has set
a frantic economic development pace to avoid a post-oil economy
slump. The recently-invigorated Texas Economic Development
Commission is unabashedly trading on the state’s mild weather,
favorable business climate, low unionism and low taxes to woo
major corporations and entrepreneurs alike.
Dallas-Fort Worth, which was never awash in the enormous oil
wealth Houston enjoyed, has been blooming as a major computer
and electronics center for some time. Big-name computer firms like
Tandy, Electronic Data Systems, Texas Instruments and Advanced
Micro Devices call Dallas home. More recently, however, the
Austin/San Antonio corridor has begun to attract major players and
entrepreneurs.
IBM, Data General, Lockheed, 3M and Motorola are among the
640 existing companies that put new facilities in Austin in the last
few years. More will follow, and the birth rate for new companies
is—and will continue to be—high. Not all will be computer com¬
panies. A shakeout in the computer industry, now well underway,
will gather steam in the year ahead. Hundreds of computer
firms—hardware and software—will merge, sell out to bigger firms
or go bust in 1985.
Aware of what a shakeout could mean to a high-tech industry still
in its infancy, economic development strategists are focusing on the
new technological adventures—of which biotechnology is the most
promising. It is the foundation upon which will rest most
technological developments in the 21st century—medical,
agricultural, new product development and energy resource
developments. Biology will be to the 21st century what physics and
chemistry were to the 20th century.
San Antonio and Austin are positioning themselves to profit from
this infant industry which will reach adolescence in the year ahead.
San Antonio’s mayor, Henry Cisneros, has made tremendous
strides in establishing his city as a center of biomedical technology.
Already, six organizations firmly planted in San Antonio are involved
The Biotechnology Capital 35
in biotechnology research and development: Texas Research Park,
Texas Research and Biotech Foundation, South Texas Medical
Center, Brooks Air Force Base, the Bum Center at Fort Sam
Houston and Southwest Biotechnology Institute. More are certain
to grow up in and around San Antonio.
Development also is certain to stretch north, paving a
biotechnology path to Austin, home to the University of Texas and
the state legislature. The legislature is enthusiastic about the pro¬
spects for economic development through research, and Austin has
what it takes to build a research community.
Long considered an ‘ ‘intellectual oasis’ ’ in a state committed to
the pursuit of oil, megabucks and the raising of prize cattle—and
despite recent publicity about the toll that rapid population
growth has taken on the city’s infrastructure and support
systems—Austin is still the closest thing Texas has to heaven.
Furthermore, city officials are committed to nurturing
biotechnology growth.
Currently, Austin is home to only six small start-up biotech
firms, a status certain to change in the year ahead as venture
capitalists begin to invest in Texas’s budding technology in¬
dustries. Among investors, there is a growing perception that
Texas is ripe for investment, unlike the mature high-tech meccas
in California, Massachusetts and Florida. Thus, venture
capitalists are setting up shop in Houston, Dallas, and Austin, as
well as other Texas cities. Their sights are on medical
technology, computers, space commercialization, and scientific
research in general.
Aided and abetted by the University of Texas’s mission to
make the 47,000-student school as good as Stanford and MIT—a
goal supported by MCC’s chief executive, Bobby Inman, and by
recent donations totaling $16 million to help the school ac¬
complish that goal—Austin is poised to expand. Biotechnology is
the most likely, and most promising, growth area.
With an aggressiveness expected from this cowboy state, San
Antonio and Austin are recruiting major pharmaceutical firms.
They’re doing so successfully. There are, however, a number of
other contenders for the biotechnology crown, some with advan¬
tages that compare favorably with Texas’s.
36 THE YEAR AHEAD
COMPETITION FOR
BIOTECHNOLOGY CROWN
WILL INCREASE
Washington, D.C., its surrounding suburbs and nearby
Baltimore have established a strong commercial biotechnology
base that is certain to grow. We can expect to see intense com¬
petition between the two regions for biotech dominance—much
like the competition between Silicon Valley, Boston’s Route 128,
and North Carolina’s Research Triangle for dominance in the
computer industry. What San Antonio lacks in federal funds it
makes up for in private venture capital and enthusiasm. What
Washington lacks in private funding it makes up for in federally￾funded research projects and proximity to five major universities
with well-developed research centers—George Washington,
Georgetown, Howard, and Johns Hopkins universities, and the
University of Maryland.
Where San Antonio and Austin have focused on medical
technology, companies in the Washington area have spent much
of their energies on commercial biotechnology products. Local
companies already produce amino acids to sweeten diet soft
drinks, enzymes to clear hair-clogged plumbing and antibodies to
detect toxic food molds. Other bio-businesses in the area are ex¬
ploring ways to use biological tools to produce industrial
chemicals, food additives, animal and human vaccines, as well as
medical diagnostic substances and cancer treatments.
In and around Washington, D.C., biotech firms are thriving on
federal funds and research grants. Last year, the National In¬
stitutes of Health (NIH) pumped $250 million into biomedical
research in the region. Agricultural biotechnology also is getting
a federally-financed leg-up in the area. According to the associate
director of the Beltsville (Md.) Agricultural Research Center,
two-thirds of all research and development funding in the
Baltimore-Washington area comes from federal agencies. Fur¬
thermore, researchers have access to highly-trained
biotechnology experts and the opportunity to manufacture prod¬
ucts through joint research with NIH.
Federal funds and facilities are a decided advantage, but not the
The Biotechnology Capital 37
final determinant in who participates in and who profits from
biotechnology research and development. Biotechnology is the
ultimate information business—a business in which what you
know is more important than capital outlay or access to raw
material. Biotech businesses range in size from small private
firms, with as few as two research scientists operating on a
shoestring budget, to corporate giants such as E.I. DuPont de
Nemours & Co., Monsanto Co., and Eli Lilly. Research and
development in biotech is by no means the sole province of phar¬
maceutical houses or chemical companies. Virtually anyone with
the knowledge and resources can play, and just about everyone
is or will soon. Companies as diverse as Anheuser-Busch and
Shell Oil are constructing research centers or negotiating joint
ventures to cash in on America’s fastest-growing industry.
Biotechnology is big business. An estimated $2.5 billion was in¬
vested nationwide in the start-up of about 100 new U.S. biotech
companies from 1975 through 1983. The stakes keep getting
higher. Worldwide the biotech industry is expected to be worth
as much as $50 billion by the year 2000.
GENE SPLICING SPARKS
BIOLOGICAL REVOLUTION
Genetic engineering was made possible only 11 years ago, with
the first spliced gene. Yet, as Dr. George Rathman, founder of
Agmen Corp., a leading genetic engineering company, put it:
Genetic engineering will “have more impact than any other
technology in the history of man, maybe including fire.” DNA
(deoxyribonucleic acid), the “blueprint of life,” is the fuel that
will fire the next industrial revolution.
Fire allowed man to melt, combine and shape metals, and
refine petrochemicals. Biotechnology, which harnesses the
energy of life, will use manipulated genes to alloy, fabricate, and
remake living organisms into industrial products. Already,
Maryland-based Genex Corp., one of the country’s five biggest
biotechnology firms, has developed a biological drain cleaner for
household use. Genetic engineering created a tiny microbe with
an insatiable appetite for human hair and nothing else. One day a
38 THE YEAR AHEAD
man-remade microbe will consume quantities of copper ore and
excrete pure copper. Toxic PCBs will be wolfed down by
microbes that exist to eat the hazardous waste product.
Biological refineries one day will create a pig that yields more
chops, a drug that cures cancer, and a plant that frightens insects
away.
Genetic engineering is not a sci-fi fantasy; it is a fact. In the
year ahead, it will become apparent that genetic engineering will
dramatically change how Americans live and how we think about
life. Every industry based on living or organic matter, and many
based on inorganic matter, will be affected by the upcoming
biological revolution. Petroleum companies, chemical manufac¬
turers, the agriculture industry, pharmaceutical houses, even
mining companies will be forever transformed by biotechnology.
At least two-thirds of the nation’s industries will benefit from this
awesome science by adopting products that lower cost and im¬
prove efficiency. To be sure, industries that fail to embrace the
inevitable will be eliminated, but many will thrive and an uncount¬
able number of businesses (and jobs) will be created because of
it.
BIOTECHNOLOGY MAY CURE
CANCER . . .
Thanks to genetic engineering, disease diagnosis and treat¬
ment will become a more precise science. In the years ahead,
beginning in 1985, monoclonal antibodies (laboratory-produced
clones of man’s natural immunities) and DNA probes (DNA
strands “rewired” to “fish” for compatible DNA strands inside
other organisms) will arrive on the market in diagnostic kits that
take the guesswork and delay out of diagnosis. Infectious
diseases such as pneumonia, inherited illnesses such as sickle cell
anemia, and various cancers will be diagnosed with easy-to-use
kits in a matter of hours rather than days. Killers such as
rheumatoid arthritis, heart disease, and many forms of cancer not
only will be diagnosed through genetically-engineered DNA but
will be treated by man-recreated antibodies. Even more revolu¬
tionary, people may be vaccinated against different forms of
The Biotechnology Capital 39
cancer, perhaps as early as the 1990s.
Monoclonal antibody products already are a $20 million to $30
million-a-year business. According to International Resource
Development Inc., a Norwalk, Conn., consulting firm, sales
could jump tenfold in the next two years and reach $1 billion by
1990. On the other hand, sales of DNA probes, a newer and
potentially more versatile product of biotechnology, were only
about $500,000 last year. Peter F. Drake, a biotechnology
analyst at the New York securities firm Kidder Peabody & Co.,
predicts that DNA probes will evolve into a $300-million industry
by 1987.
Scientists at St. Louis-based Monsanto Co. spent time and
energy to encourage a petunia to acquire a useless ability: to be
resistant to antibiotics. After the petunia flowered and produced
seeds that also proved antibiotic-resistant, they knew it was
possible to introduce any gene into plant cells to dictate specific
characteristics, such as drought resistance. The Campbell Soup
Co. and Heinz USA both fund small laboratories that one day will
produce bulkier tomatoes. (Every 1 percent of additional solids
engineered into tomatoes is worth an estimated $78 million to the
soup and catsup industries).
. . . TRANSFORM
AGRICULTURAL PRODUCTS . . .
Genetic engineering will transform the farm as dramatically as
it will transform medicine—although not as quickly. By the year
2000, farmers will till fields that need neither fertilizer nor as
much rain. Com plants will be genetically manipulated to grow
straighter, shorter, and to carry larger ears—maybe without
tassels, which, according to scientists, are useless. Cotton will
be instructed to carry certain textile industry-specified
characteristics. Such genetic improvements will result in a seed
market worth $8 million in 1985 and $7 billion by the year 2000.
Researchers are manipulating animal genes to produce pigs
with greatly reduced fat content and larger, disease-resistant
cows, and to cross-breed animals. Pigs and sheep, or hens and
geese, for instance. Eventually, livestock farmers will raise
40 THE YEAR AHEAD
animals that grow faster than normal, without eating more than
normal, yet producing more meat or milk or eggs. (For many
observers not involved in the process, the whole process will
seem phenomenal—and at least a little frightening.)
. . . AND CREATE NEW ENERGY
SOURCES
Other industries—chemicals, pollution control, and energy and
mining, among them—represent biotechnology’s final frontier.
So far, few investors have been willing to make the investment to
change these capital-intensive industries. However, money is
beginning to trickle in. Eventually, these industries will be fueling
miUion-dollar markets with biologically-customized micro¬
organisms, and will be saving consumers money.
According to reports from the Congressional Office of
Technology Assessment, Tylenol and other chemical analgesics
could be made at 20 percent less cost by genetically-engineered
fermentation methods. Manufacturers could keep their 100 per¬
cent markups and still save consumers as much as $200 million a
year. Vitamin B12 synthesized by conventional methods costs
$3,000 a pound. New technology will drop the price tag 90 per¬
cent in the next 20 years.
At the University of Illinois Medical School in Chicago, tiny
bugs introduced into soil contaminated with Agent Orange eat the
powerful defoliant. Within weeks, 98 percent of the poison is
gone and the soil supports healthy plants. The scientist who
created the bug wants to try the micro-organism on a real toxic
dump, but insurance companies refuse to cover the release of the
organisms into the environment unless a federal agency sponsors
the project. So far none has been willing.
In ten years, companies will be ready to clean up oil spills with
genetically-manipulated organisms. Hard-to-reach oil will be
forced out of the ground by countless rock and mineral-eating
organisms.
Biotechnology also will create new sources of energy. General
Electric, which has committed tremendous sums of money to
biotechnology research and development, anticipates a time
The Biotechnology Capital 41
when bugs will be used for metal extraction. Currently, a team of
scientists at GE’s lab are building an “enormous library of
genes” to help natural organisms break down metals.
REGULATORY QUESTIONS
REMAIN TO BE ANSWERED
Biotechnology is an industry that is outpacing current laws and
regulations. There is a growing debate over the ability of existing
regulatory structures to cope with the burgeoning commer¬
cialization of this awe-inspiring new industry. Potential risks in¬
volved in the deliberate release of organisms with non-natural
genotypes is virtually impossible to determine. Those risks are
the focal point of lawsuits, court orders prohibiting the release of
gene-altered bacteria into the environment, and heated debate
among scientists, environmentalists and others. In the year
ahead, as new biotech frontiers are crossed, the debate will
intensify.
The NIH’s Recombinant DNA Advisory Committee is the only
federal agency with a clearly-defined mission to regulate
biotechnology—to ensure biosafety and laboratory conditions for
publicly-funded biotechnology projects. Private research firms
are not monitored, except through voluntary compliance with
federal guidelines. Many critics find that indefensible. To date,
the industry has been cooperative, but there is growing concern
that in this highly competitive industry, voluntary guidelines may
not be sufficient to protect the public from unknown and indeter¬
minable dangers. Recently, the Environmental Protection Agen¬
cy (EPA) stepped forward to claim regulatory authority over
deliberate-release cases under the Federal Insecticide, Fungicide
and Rodenticide Act (FIFRA) and the Toxic Substance Control
Act (TSCA). However, the EPA’s claim to authority under
TSCA pivots on whether new genetically-manipulated organisms
can be defined as chemicals.
Throughout 1985 we expect this debate to escalate, as Wall
Street, the courts, the EPA and the marketplace decide just how
fast the biorevolution will be allowed to transform our lives.
FOOD POLLUTION:
AN ENVIRONMENTAL
ISSUE PRIME FOR
ERUPTION
It’s been almost a year since federal investigators
found residues of ethylene dibromide (EDB) in vast amounts of
the country’s grain supplies and bake mixes. Public pressure
forced the recall of foodstuffs known or suspected to contain
EDB residues, a ban on virtually all uses of the pesticide, and
creation of emergency standards to protect the public from
potential hazards of this potent carcinogen. While the EDB con¬
troversy may have passed out of public consciousness, concern
over the effects of pesticides, herbicides, and hormone and an¬
tibiotic treatments of livestock on the food chain has not. There is
a growing perception in this country that much of our food is
polluted. In 1985 the controversy will erupt.
There is reason for concern. Said Charles M. Benbrook, ex¬
ecutive director of the National Academy of Science’s board,
“It’s wrong to assume that the EDB case was exceptional.
There are several dozen other pesticides in wide use that are
likely to raise the same types of human health questions.” With
an astounding 45,000 toxic farm chemicals now in use, no one can
predict which will become the next “pesticide of the month.”
Scientists do agree on some likely candidates.
Carbon tetrachloride, the most widely used grain fumigant, is
high on the list. Like EDB it is a known carcinogen—causing
chronic liver and kidney damage and possibly birth defects. Car¬
bon tetrachloride residues have been found in bake mixes and in
half the grain samples tested. Although the Environmental Pro-
Food Pollution Erupts 43
tection Agency has long considered this potent fumigant too
dangerous to use on food, it has not set residue safety limits for
it.
Ethylenebisdithiocarbamates (EBDCs) have been considered
potentially dangerous since the early ’70s, yet remain a widely
used class of fungicides. Unlike most other pesticides, EBDCs
leave carcinogenic residues in canned fruit, vegetables, and even
beer. Canadian officials have set strict regulatory controls over
its use. The EPA has decided that more study is needed.
In the late ’60s DDT (dichlorodiphenyltrichloroethane) was
discovered to have a devastating impact on wildlife. That
discovery sparked a controversy over the spraying of tons of tox¬
ic chemicals on the nation’s crops. Consumers were made aware
of the fact that pesticides were doing more than turning
America’s agriculture industry into a wonder of the western
world—they were poisoning the food chain. DDT is once again
being found in large amounts in the environment, despite its 1972
ban. A loophole in that law allows the sale of dicofol, a pesticide
manufactured from DDT.
Although each new pesticide is supposed to be tested to en¬
sure it doesn’t threaten public health or the environment, and
chemical manufacturers are supposed to determine if toxic
residues remain on produce, complete health-hazard assessment
is made on only 10 percent of the pesticides that reach the
market. Furthermore, the results of many pesticide tests, fre¬
quently conducted on contract by privately-owned toxicology
labs, have been found to have been falsified. Filling those “data
gaps” could take years, and consumers aren’t anxious to wait for
results.
We are learning that meat in grocers’ freezers is far from
chemical free. Tons of antibiotics and growth hormones are being
added to the fodder of commercially-raised farm animals. Ap¬
parently, most of the pork and much of the beef and poultry in the
United States is raised on feed treated with low levels of an¬
tibiotics, such as tetracycline and penicillin. Given to animals to
make them disease-resistant and to help them grow faster, the
chemicals also create antibiotic-resistant bacteria which are pass¬
ed on to people in meat, milk, or eggs.
44 THE YEAR AHEAD
Recently, scientists discovered that because of those
antibiotic-resistant bacteria, people who become ill and are
treated with antibiotics are unable to fight off infection.
A study conducted by the Federal Center for Disease Control
connected 18 cases of human poisonings, including one death, to
hamburger meat infected with a resistant strain of the bacteria
salmonella. Twelve of the victims had been talking antibiotics for
other medical problems. Rather than help contain the food
poisoning, antibiotics administered to the patients actually killed
off competing organisms and allowed the resistant bacteria to
flourish. Two other studies, one conducted by the Public Health
Department of Seattle—King County, Wash., and another by the
Federal Center for Disease Control found that the presence of
antibiotics in meat constitutes a threat to human health.
In 1977, the Food and Drug Administration urged a ban on the
use of antibiotics in animal feed. Farm state legislators, at the
urging of the livestock and pharmaceutical industries, blocked the
ban in Congress. However, officials at the agency predict that
consumer pressures will force Congress to reconsider its posi¬
tion. Expect to see this critical debate make headlines in the year
ahead.
The problem could be enough to persuade more people to
become vegetarian—were it not for the fear of poisons in our
fruits and vegetables.
HEALTH CONSIDERATIONS
NOW DRIVING FORCE IN
FOOD MARKETS
Concern that what we eat could kill us has served to accelerate
the already-pervasive wellness trend. Virtually the entire food in¬
dustry has jumped on the wellness wagon. Four-star restaurants
and fast-food franchises sell salad and fresh fruit on the same
menus with French pastries and French fries. Supermarkets are
bulging with fresh produce and natural foods, and farmers’
markets are appearing everywhere.
In the 1960s, hippies and other counterculture types ate
“health food’’—bean sprouts, tofu burgers and plain yogurt. To-
Food Pollution Erupts 45
day, yuppies eat lite and “natural” foods—salads, yogurt, and
tofutti (a tofu-based frozen dessert that looks and tastes a lot like
ice cream). They eat more nutritious foods at home, and they
carry their taste for healthier foods with them when they eat out.
Supermarkets and restaurants have responded to changing con¬
sumer habits with variety and imagination.
Safeway Stores offer self-service bulk foods in more than half
their stores and full-line natural food centers in hundreds more.
Safeway also is beginning to buy locally-grown produce that is
fresh from the farm—untouched by chemical sprays. In most
Giant Inc. stores, consumers can make their own salad from an
in-store salad bar and learn more about nutrition from fliers pack¬
ed with their groceries.
New York’s ultra-chic Four Seasons restaurant now offers
patrons “Spa Cuisine”—meals in which “every single gram of
calcium, fiber, zinc, and iron has been checked out by a nutri¬
tionist.” Houston’s elegant Chez Eddy is run by Methodist
Hospital’s Institute of Preventive Medicine. Hundreds of
restaurants across the country are cooperating with the
American Heart Association by agreeing to serve, on request,
salt-free food, margarine, skim or low-fat milk, smaller portions,
and more fresh fruit. They also offer alternatives to fried
foods—like baked, boiled, or poached, fish and chicken.
The Marriott, Fairmont and Sheraton hotel chains are among
those that have signed contracts with the American Heart
Association, agreeing to provide “heart-healthy” menus that
have been approved by association nutritionists. American
Airlines now offers ‘ ‘heart-healthy’’ choices to travelers who re¬
quest them in advance.
The American Cafe, with six restaurants in its home city,
Washington, D.C., another in Baltimore, and plans to expand na¬
tionally, has gained a reputation for the freshness and quality of
its meals. Recently, the cafe’s owners renewed their commit¬
ment to serving healthy foods. Their new menu features 15
specifically designated healthier items, identified with an apple,
which are lower in salt, cholesteral, sugar and fat. The meals
were developed by the cafe’s executive chef in consultation with
Rodale Press, publishers of Prevention Magazine and Organic
46 THE YEAR AHEAD
Gardening, among other publications, which guided the American
Cafe in its selection of healthier foods.
Future plans for The American Cafe include expanding their
direct contact with local farmers to develop an alternative means
of distribution for specialty produce, such as baby vegetables and
lettuces. They have already begun to buy locally grown produce
when available. Convinced that buying directly from local farmers
will be commonplace in the near future, the cafe’s owners are
establishing their link early. Others, including supermarkets also
have begun to buy locally grown produce. Safeway Stores on
Maryland’s Eastern Shore, for example, buys strawberries, in
season, from local growers. Interest in locally grown produce,
the ultimate in fresh produce, will help to stimulate growth of
small farms, a trend already underway. Expect to see more small
farms, and more “big stores” and restaurants buying from small
farms.
Fast food establishments that offer only healthy menus are be¬
ing established around the country as well. The Good Earth￾owned by General Mills—now has 42 restaurants in California,
Michigan, Florida, Utah, and Nevada. The Good Earth features
foods low in salt and cholesterol and with no preservatives.
Another chain offers “life fast food,” such as vegetarian pita
bread sandwiches and burgers with a baked potato instead of
French fries. Expect a flurry of fast-food, health-conscious chains
to appear in the year ahead.
AMERICA’S PREOCCUPATION
WITH FITNESS IS NO FAD
Major food processors also now offer a variety of “lite” and
natural food products. Castle & Cooke Inc.’s Dole Unit recently
introduced its new line of Fruit & Juice bars, a frozen snack bar
made from fruit juices and chunks of real fruit. Campbell’s now
sells Juice Works—100 percent fruit juices in bottles and cans.
America’s preoccupation with fitness is no fad. When we were a
nation of farmers, working in the fields from sunup to sundown,
we didn’t need to find ways to get exercise, our work was our ex¬
ercise. Even when we were a nation of laborers, doing arduous
Food Pollution Erupts 47
physical tasks eight hours a day, we got plenty of exercise on the
job. There wasn’t much need for, or interest in, fitness boutiques.
Today, with most of us working in information-intensive jobs,
working more with our heads than our hands, exercise has
become an off-hour obsession—a way to balance our mental and
physical energy.
As we spend more time (and money) on looking and feeling fit,
we also are becoming much more concerned about what goes into
our bodies. Americans ate more vegetables per person from 1980
to 1982 than in any three-year period in history. In 1983, salads
accounted for 17 percent of total restaurant sales, according to
Nation’s Restaurant News. Beef consumption has dropped
dramatically, while fish consumption rose—30 percent during the
1970s. People care about what they put in their bodies.
In keeping with the move toward eating “lite” is the decrease
in consumption of hard liquor in favor ofbeer or wine. And there’s
a growing interest in low-alcohol and no-alcohol beer and wine.
There is some evidence that this is a worldwide trend. Even in
France, where a meal without wine was once considered unciviliz¬
ed, one can order Brut de pomme—a cider aimed at the soft-drink
consumer—without drawing sneers. In France, consumption of
table wine dropped 20 percent between 1978 and 1983. C’est la
vie.
THE YEAR OF THE
GLOBAL PORTFOLIO
On September 7, 1984, the Singapore International
Monetary Exchange and the Chicago Mercantile Exchange for¬
malized a trading system that has existed informally for some
time: 24-hour trading. Simex will make it possible for positions
taken in Singapore to be closed out in Chicago, and vice versa. A
customer now can buy a Eurodollar or West German mark
futures contract in Chicago at noon, and close out that same con¬
tract 12 hours later on the Singapore Exchange.
While Chicago sleeps, traders will keep their offices open with
a small staff, so that banks, insurance companies, pension funds,
and anyone else who cares to can call their local brokers to place
an order. All-night brokers will then call Singapore to carry out
the trade. There are a great many advantages to 24-hour trading,
not the least of which is that traders can respond immediately to
news that would force down the value of their Eurodollars, such
as money supply figures that affect interest rates. Since the main
function of futures contracts—agreements to deliver or receive
commodities or currencies at a specified time and price—is to
hedge risks, responding to fluctuating interest rates early can
save a trader thousands of dollars.
Under the current system, traders who know that the value of
their futures contracts will decline overnight cover themselves
by taking offsetting positions in the informal international banking
network. Later, they close out their contracts with “the Merc”
and with the interbank network—four trades to complete one.
The Global Portfolio 49
The Singapore link allows them to close the contracts out within
12 hours at the Singapore Exchange. Furthermore, Simex trades
will be in dollars, so there will be no need for currency ex¬
changes. In the international banking network, currency ex¬
changes are commonplace.
To date, response to this historic agreement has been en¬
thusiastic. Some financial analysts, however, express concern
over regulatory controls. They question whether American
traders will be able to obtain documents from a foreign jurisdic¬
tion, should litigation or government investigations of trading
claims be necessary. They also are concerned that Simex will not
police its traders as closely as the Merc does. William Brodsky,
the Merc’s executive vice president, dismissed those concerns,
saying, “We’re not creating something, we’re accommodating
something that already exists informally: around-the-clock
trading.’’ He also noted that interbank trading has been going on
between London and Hong Kong for some time and has been ac¬
complished without serious international regulatory conflicts.
New York brokerage company officials acknowledge that
round-the-clock trading on the New York Stock Exchange is in¬
evitable. In fact, the NYSE is now studying a possible move to
24~hour trading because of international securities activity. Noted
one Jacksonville, Fla., broker, “The world is becoming so small
it is inevitable.”
BEGINNING OF THE END OF
THE TRADING FLOOR
Extraordinary advances in telecommunications technology will
permit 24-hour trading; the fact that we are moving toward a
single unitary global economy makes 24-hour trading essential.
Much of that trading will be conducted through electronic chan¬
nels. The year 1985 marks the beginning of the end of the trading
floor.
Nasdaq—the automated quotation system for over-the-counter
stocks—is the fastest-growing stock exchange in the world. Its
average daily turnover rate is four times that of the London Stock
Exchange, which in 1983 turned over $39 billion worth of
50 THE YEAR AHEAD
business. Between 1979 and 1983, while trading on the NYSE
tripled and trading on the American Stock Exchange doubled,
trading on Nasdaq rose fivefold. Among other features, Nasdaq
offers traders access to the Computer Assisted Executive
System (CAES), through which traders buy and sell as many as
300 shares per transaction via computer terminals.
Nasdaq has not yet transferred all trading from telephones to
computer screens, but Instinet has, and Nasdaq will next year.
Instinet operates a screen-based trading system for U.S. ex¬
changes, Nasdaq, as well as the other exchanges. On Instinet
there are no limits on transactions. Presently carrying 3,500
stocks from U.S. exchanges, Instinet plans to expand overseas,
with the German and United Kingdom stock exchanges as first
targets.
The world’s first fully-computerized futures market—Intex—
has opened its “electronic doors,” offering members access to
markets in four contracts: gold, silver, U.S. Treasury bonds, and
freight. In the year ahead, many more electronic trading systems
will go on-line because, in today’s market, information is the
critical link. It must be delivered as quickly and efficiently around
the globe as it is around the comer. Money, after all, is simply in¬
formation in motion. These days, bankers have to know more
about electronics than about money. 1985 will be the year of the
global portfolio—the year when traders worry as much about
what’s happening in Japan, Germany, and London as they worry
about what’s going on in New York or Chicago.
CITIES CONTINUE THEIR QUEST
FOR GLOBAL MARKETS
A confluence of circumstances led America’s cities to the con¬
clusion that participation in international markets was their best
hope for future prosperity. Budget constraints as a result of cuts
in federal aid, continued decline of the smokestack industries,
and sharply decreased local revenues forced city officials to take
a global view. Although 30 states now maintain offices overseas
to encourage international trade and to lure foreign corporations
to their area, it has only been recently that city officials have
The Global Portfolio 51
begun to reach out for international connections in trade and
investments.
City officials have discovered that they can play an important
role in bringing banks, traders, and investors together with a
minimum of red tape. Although no city has yet developed its own
foreign policy, and few can afford to set up overseas offices,
more have added international economic development respon¬
sibilities to staff members and departments. Philadelphia, for ex¬
ample, now has a foreign trade development office, and Seattle
has a new coordinator of international trade and tourism. San An¬
tonio is developing better ties with Japan and Mexico through its
Office of International Relations. And during the past four years,
the U.S. Conference of Mayors has included dozens of American
cities in promotional missions to Europe and Hong Kong.
Recognizing that international market development is the key
to future growth and prosperity for U.S. cities, the National
League of Cities held its second annual international trade￾development conference during the summer of 1984. The aim of
the conference: to coach cities on how to assess their export
strength, attract foreign investment capital, and organize trade
missions.
In 1985, the pace with which city and state officials pursue in¬
ternational market development will accelerate, as they become
more fully aware that the global economy is the only economy.
AFTER A LONG
ENGAGEMENT,
COMPUTERS AND
TELEPHONES WILL
MARRY
(Invitations are expected to go out this year)
In time, every computer in the world will be connected
to every other computer—a global network in the most literal
sense. Hard to imagine? When Alexander Graham Bell said,
“Mr. Watson, come here, I want you,” his words didn’t im¬
mediately conjure up images of a world connected by copper
wires and undersea cables either. A single desktop unit capable
of simultaneous voice and data transmission already exists. It is
both a telephone and a computer and it will profoundly alter how
information is processed and disseminated worldwide.
1985 will be the year in which AT&T and IBM finally admit
they are in the same business. Telephone and computer com¬
panies—once very different—are becoming remarkably similar. A
marriage of the two was inevitable. Technologically they have
been engaged almost from the beginning, but a true marriage
was only made possible in the past three years when a unit was
developed that combined a personal computer and an advanced
telephone. Voice and data work stations that transmit both
simultaneously are the latest entry into the world of office
automation.
Although the first attempts at marketing “computer-phones,”
in 1981, met with limited success—only 20,000 units were
sold—industry analysts believe the market could grow to $1
billion by 1990. At least a dozen companies have announced in¬
tentions to develop models that are easier to use and more
powerful than original models. One new entry, Zaisan Corp., is
Computers & Telephones Marry 53
being closely watched by industry analysts. Its ES.3 is the first
stand-alone unit to combine high-powered phone options, like
one-touch dialing and an electronic “Rolodex” file, with the com¬
puting power of an IBM PC. Another new entrant, Davox Com¬
munications Co., recently sold 600 $2,500 units to Morgan
Stanley & Co., a New York investment house. The Davox unit
allows traders to dial calls automatically from listings in their per¬
sonal directory or mainframe data base.
Voice-data units currently available run the gamut from Mitel
Corp’s Kontact, which has full phone and computer functions but
costs $5,000 and takes up almost half the space on an average
desk, to Cygnet Technologies Inc.’s Co-System, which costs
$1,495 and can be added to IBM PCs or PC-compatible com¬
puters. These smaller firms that jumped into the market early
will face some serious competition. Giant telecommunications
and computer companies are about to make an assault on this
potentially lucrative market.
Wang Laboratories Inc. introduced its voice-data work station
at a San Diego trade show. IBM is betting $1.5 billion—the price
for acquiring Rolm Corp., a leading telephone private branch ex¬
change (PBX) switching equipment manufacturer—that voice￾data work stations are the wave of the future. Not to be left out,
AT&T has thrown its considerable marketing weight into the of¬
fice automation frenzy and intends to capture a major share of the
market.
COMMUNICATION IS THE
CRITICAL LINK FOR
INFORMATION PROCESSORS
When E.F. Hutton selected a system with which to automate
its 400 brokerage offices, communications capability was the
deciding factor in choosing Data General Corp. products. Each
Hutton sales office now has its own Data General minicomputer,
linked to terminals on every broker’s desk. The 400 minicom¬
puters in turn are connected to Hutton’s computer center in New
York.
A frenzied proliferation of computers—particularly personal
54 THE YEAR AHEAD
computers—has made the transmission of data from one location
to another virtually inseparable from its processing—and equally
important. Said John L. Lewis, senior vice president for informa¬
tion services at Chemical Bank, “Moving information rapidly and
efficiently is absolutely crucial to our business. ’ ’ Communications
are the critical link for information processors. Consequently,
computer companies scramble to gain communications expertise
and communications-based products, while communications com¬
panies tread not so lightly onto the computer companies’ turf.
Although industry analysts almost gleefully predict “a clash of
the titans,’’ AT&T (with $34 billion in assets) going head-to-head
against IBM (with $32 billion in assets) for the telecomputer
crown, few analysts believe that computer companies will offer a
complete line of telephone services or vice versa. At least for the
year ahead, most companies will seek compatriots outside their
area of expertise.
Data General has technology-exchange agreements with
several communications equipment makers. Digital Equipment
Corp. has technology agreements with Northern Telecom Ltd.,
and Hewlett-Packard, Tandem Computers, and Prime Computer
are all selling satellite antennas and transmission services from
Vitalink Communications Corp. Still other computer makers have
chosen to invest in communications companies in order to acquire
their expertise. IBM bought Rolm, and pumped more than $230
million into Satellite Business Systems. Last April, Wang
Laboratories Inc. paid $22.5 million for 15 percent of InteCom
Inc., a fast-growing PBX company, and NCR owns 19 percent of
Ztel, a recent PBX startup.
Whether partnerships or partial ownerships, such ar¬
rangements are tacit admissions that computer companies and
communications companies are in the same business.
TELEPORTS: INFORMATION
TRAFFIOCONTROL TOWERS
San Antonio’s Mayor Henry Cisneros plans to transform the
city into a major center for transportation of information
worldwide. Three companies are sponsoring the development of
Computers & Telephones Marry 55
a teleport—an “electronic airport terminal through which
information-hungry firms will ‘book’ flights of data and voice
messages...”
Sponsored by Ray Ellison Industries Inc., (a San Antonio real
estate development firm), Satelco, Inc. (a San Antonio informa¬
tion transfer company), and Notre Dame Development Corpora¬
tion (a Phoenix real estate development firm), the Texas
Teleport should be operational in early ’85, and is already well on
its way to becoming the information hub Mayor Cisneros envi¬
sions. USAA Satellite Communications Company, a wholly￾owned subsidiary of the San Antonio-based insurance company
USAA, has agreed to link its earth station and satellite
capabilities to the teleport. Electra Communications Corporation
(ECC), a Dallas-based telecommunications company, has agreed
to link the teleport to its planned fiber optic cable communications
network. The fiber optic system will connect Dallas to Houston
via a “backbone” network. Connections with the backbone will
access San Antonio, Austin, and Fort Worth. ECC also will lay
fiber optic cable between downtown San Antonio and the Texas
Teleport. Texas businesses outside the teleport development
area will be able to access the network through coaxial cable in¬
terconnections provided by Rogers Cablesystems Inc.
WORLDWIDE DATA
COMMUNICATIONS NETWORK
UNDER CONSTRUCTION
Across the country, 20 other teleports are planned or already
under construction. Two have agreed to link up with the Texas
Teleport. The New York Teleport, a $300-million joint venture
between Merrill Lynch & Co. Inc., Western Union Co. and the
Port of New York and New Jersey Authority, has agreed to link
the Texas Teleport via satellite. The Chicago Link, an already￾operational earth station, and the Chicago Teleport, with three
operating antennae and ten microwave channels, have also
agreed to a link-up with San Antonio’s teleport.
Teleports also are planned in Alameda, Los Angeles, Portland,
Oregon, Seattle, Denver, Dallas, Houston, New Orleans, Tam-
56 THE YEAR AHEAD
pa, Washington, D.C., Boston, Cincinnati, Columbus and
Honolulu. Internationally, London, Tokyo and Hong Kong
already have operational teleports. Forty other countries plan to
develop transportation centers. Outside the U.S., Japan is the
most ambitious. The Japanese government plans to build
teleports in at least 10 of the country’s largest cities.
Soon a company in Dallas, wishing to transmit data to San
Francisco, will make arrangements through the Texas Teleport
to first send its data to the teleport via microwave transmitter, or
perhaps the phone lines. When the data is received at the
teleport, arrangements will be made to have it “shipped” to San
Francisco by satellite. The satellite transmission will transport
the data to a teleport close to San Francisco, and from there it
will be sent to its destination either via fiber optics or coaxial
cable or perhaps another microwave transmitter. Teleports will
serve as ground control for an overwhelming volume of data
communication.
It takes no great leap of imagination to envision a time when
teleports will be so thoroughly interconnected, much in the way
cities are connected by complex and overlapping air travel route
systems, as to create a worldwide network for the cost-effective
and efficient transportation of information. Virtually all teleport
developers believe that, in the not-too-distant future, companies
will ship data and toll calls coast to coast, and country to country,
via teleports as regularly as they now fly executives between air¬
ports. The carriers will be major long-distance companies, such
as AT&T, MCI, Sprint and others, that will pay fees to “take off
and land” from the teleport’s satellite earth stations.
Enthusiasm and financial commitments from a great many com¬
panies that are either in the business of transporting information
or rely on efficient information have sent a shiver through
AT&T’s recently divested offspring. While developers call it pro¬
gress, and applaud each new system, local phone companies call
it something else: competition. And they’re lagging behind. They
lag technologically—their aging copper wire network is not ade¬
quate for the needs of most information-intensive businesses,
and they have been slow to upgrade equipment. And they lag in
competitive pricing—teleports and most telecommunications net-
Computers & Telephones Marry 57
works that bypass local phone networks can underprice them. As
long as universal telephone access is a priority—and there is no
indication that Congress or state legislatures feel other¬
wise-local phone companies will continue to be undercut by
others with more advanced technological capabilities and greater
price advantages.
FIBER OPTICS: INFORMATION
GROUND TRANSPORTATION
Teleports allow companies to transport information over long
distances via telephones and satellites in a matter of minutes;
fiber optics provides short-distance ground transportation in a
matter of seconds. Already telephone companies, industrial
parks, even universities are installing optical fibers to replace
conventional wiring. AT&T’s fiber optic installations went from
just 3,740 miles in 1980 to nearly 200,000 miles in 1983. Con¬
tinental Telecom, GTE, and MCI Communications added another
50,000 miles to the network. In 1985, the pace of fiber optic in¬
stallation will quicken. By the year 2000, conventional copper
wires could be obsolete.
Use of fiber optics—thin strands of glass that transmit laser
light signals in much the same way wires relay electrical im¬
pulses—allow the transmission of voices, video signals, or com¬
puter data faster and more clearly than conventional telephone
wires. Fiber can transmit in one second what would take copper
wires 21 hours. Today, fiber’s information-carrying capacity is
250 times greater than that of copper, and by next year its
capacity will be 500 times greater. Fiber has an elastic traffic
capacity. The only limitation on how much can be transmitted
how quickly is the speed of the laser transmitter. And that speed
can be changed. When a phone company or any sender’s line
becomes overloaded, the systems operator can simply install a
faster laser.
Fiber optics are opening the door for just about anyone to
become a telecommunications company if he wants to. Many
want to. In Washington, D.C., the Washington Metropolitan
Area Transit Authority is considering building a multibillion-dollar
58 THE YEAR AHEAD
fiber optic communications system in its Metro subway tunnels.
The system would carry not only Metro’s messages, but also
television, phone and computer signals for businesses and
government. Metro officials believe that developing such a net¬
work not only would improve their internal communications
capabilities, but would provide a way to generate revenues.
Many are considering that option.
A global link-up through fiber optics also is in the works. The
Federal Communications Commission (FCC) recently authorized
eight U.S. companies to participate in the construction of the
world’s first fiber optic undersea telephone cable. Joining the
American companies will be 26 European countries and
Teleglobe of Canada. Stretching from Tuckerton, N.J., to ter¬
minals in Britain and France, the cable is expected to be opera¬
tional by mid-1988. Handling 37,800 telephone calls
simultaneously, as well as carrying TV signals and computer data
at high speeds, it will be the first real competitive threat to In¬
telsat’s global satellite system.
Information is the foundation upon which the new economy is
being constructed. By the end of 1985, as much as 86 percent of
the workforce will be involved in some way with gathering, pro¬
cessing, and disseminating information next door and around the
globe. Communications has become so vital to information pro¬
cessors that it now helps determine, to a large extent, which
companies will survive the silent revolution. Computer com¬
panies and communications companies alike either will be at war
with each other or will marry, with the intent of enjoying a
mutually profitable union. Signs point to a happy marriage.
DOCTORS, DRUGGISTS
AND DELIS WILL
DELIVER
In Pinellas County, Fla., doctors make housecalls. On¬
ly a handful so far, but more will follow suit. An oversupply of
physicians, an infusion of corporate money and talent, and a na¬
tionwide effort to curb health-care costs have conspired to create
an environment of intense competition for health administrators
and professionals.
Physicians, once fairly certain of stepping into a lucrative prac¬
tice or well-paying hospital staff position, now are forced to
market their skills and advertise their services. As a result, some
are stepping out of the sterile hospital environment and into their
patients’ living rooms.
Doctors Home Care, a division of Instant Care Centers of
America, a chain of walk-in clinics—which is owned by National
Medical Enterprises, a giant health-care corporation that owns
hospitals all over the U.S.—takes blood tests, X-rays and EKGs
in the home. To be served by Doctors Home Care, a patient
must be shut-in or suffer from temporary disabilities that prevent
him from traveling, and must be a patient of a physician in the
group.
Perhaps for the first time, the medical industry is taking into
consideration the convenience of the patient in its system of
delivery. House calls are one example: free-standing emergi- and
surgi-centers are another. Clinics located in suburban
neighborhoods are staying open 12 and sometimes 24 hours a
day, seven days a week, with no appointment needed. These
60 THE YEAR AHEAD
neighborhood clinics are not likely to put central-city physicians
out of work. They fill a care gap and give patients a choice.
TWO'INCOME FAMILIES CREATE
MARKET FOR CONVENIENCE
Heightened competition in virtually every market sector is for¬
cing businesses to be more consumer-driven. Growing numbers
of two-income households, with more women in the work force
than ever before, creates an environment in which convenience
is almost as important as cost and quality in choosing one product
or service over another. When cost and quality requirements
have been met, convenience becomes the determining factor.
A new Pathmark grocery store in Greenvale, Long Island, is
bigger than a football field and three times larger than a traditional
grocery store. Essentially a mall without walls, it combines
drugstore, grocery store, electronics center, poster center,
gourmet shop, bakery, and discount store—all in 54,000 square
feet. Known as superstore, the mega-store offers variety in
brands, package size and quantity, but more importantly it offers
convenience to working couples and single-parent households.
Pathmark is among the leaders in the development of
supercenters or superstores. Of its 75 stores in the New York￾New Jersey-Connecticut metropolitan area, 57 are superstores.
Six more are under construction. Although most supercenters
are in suburban areas—where two-income families predomi¬
nate—Pathmark opened New York City’s first in January.
Krogers, Randalls, and Safeway are among the national chains
that have created this phenomenon.
Superstores account for 12 percent of the country’s 29,000
supermarkets and nearly half of the $263.8 billion total super¬
market sales volume. They enjoy success largely because they
respond effectively to consumers’ demand for quality, cost, and
convenience.
THE COLONEL COMES CALLING
Not to be left out of the market, ‘ ‘convenience” stores such as
Convenience Counts 61
Southland Corporation’s 7-Eleven, Circle K Corp., the nation’s
second-biggest convenience store chain, and Panama, Fla.-based
Sunshine Jr. Stores Inc. are regrouping to meet the challenge.
Squeezed on one end by superstores and the other by fast food
establishments, the nation’s 54,000 convenience stores attempt
to be more things to more people.
In an effort to change the convenience-store image from an
overpriced late-night grocer to a one-stop extravaganza, many in
the industry have added fast food to the traditional fare of bread,
milk and eggs. Others are installing gas pumps and automatic
teller machines. Sunshine Jr. sells $50 ceiling fans and $109
kerosene heaters, as well as potted plants and T-shirts, car-care
products and telephones. Said Randall Spear, director of mer¬
chandising for Sunshine Jr. Stores Inc., “There aren’t any
restrictions anymore to the kinds of products that you can put in
convenience stores.” Apparently not.
Louisville-based Kentucky Fried Chicken Corp. is experiment¬
ing with the ultimate in convenience: home deliveries. For a $5
minimum purchase and an additional $1.25 delivery charge, the
franchise shop will deliver within a one-and-a-half mile radius of
the store. Expect others to follow. In the year ahead, we will see
a dramatic increase in the number of business establishments
willing to travel the extra mile to serve a customer.
ORDER COASTAL EXPRESS
GOURMET FOOD BY WIRE
Americans’ penchant for personal service at their convenience
has paved the way for profitable business starts. A West Hart¬
ford, Conn., woman parlayed a business marketing degree and
an interest in good food into a fast-growing business: Coastal Ex¬
press Catering. Through Coastal Express people can order food
by wire. With 2,000 caterers and gourmet foods shops on file and
3,000 telephone directories, she fills any specialty food order,
from birthday cakes to elaborate turkey dinners, and has it
delivered around the comer or across the country. Orders placed
through a toll-free number can be charged to major credit cards.
62 THE YEAR AHEAD
Believed to be the first food-by-wire service, Coastal Express
probably won’t be the last. Quality and convenience are a winning
combination. In the year ahead, fast-food franchises and gourmet
shops, drugstores and video rental shops will deliver in an effort
to beat the competition.
HOTELS PROVIDE INFORMATION
AT THE TOUCH OF A BUTTON
A 125-room Quality Inn franchise in Danvers, Mass., has given
convenience a new definition. Now along with shampoos, hand
lotions, and hair dryers, every guest room has a computer.
Through Red Button Room Service, guests retrieve airline
schedules, shopping and dining guides, local entertainment direc¬
tories, public service announcements, and information on nearby
sports and fitness centers. Soon, daily stock market quotations,
Associated Press wire-service stories, and advanced check-out
will be available via this two-way communication system.
Videotel, a Woburn, Mass., computer maker, leases its com¬
puters to the Quality Inn. Data also is relayed from Videotel to
the hotel’s computer, and then is routed to individual rooms
through a master antenna system. Guests retrieve information
from the system via television sets that have joysticks attached
to them. There is no keyboard.
The Inn has been so successful with its new service that
Maryland-based Quality Inns International is considering install¬
ing computers at some of its other 661 hotels in 1985. Other
hotel chains considering offering Videotel’s Red Button Room
Service are the Hilton, Marriott, and Howard Johnson’s.
MORE HOTELS WILL GO
ON-LINE TO WIN CUSTOMERS
As in other businesses, competition in the hotel industry is stiff
and getting stiffer. The hotel market is becoming increasingly
segmented, with some specializing in luxury accommodations and
others catering to the business traveler on a budget. All are look¬
ing for ways to attract customers by offering appropriate
Convenience Counts 63
amenities. At a time when the speed with which information is
processed and disseminated can mean thousands of dollars to a
company, installing computers in hotel rooms makes sense.
Several companies are betting on it, as they prepare to offer
room-automation programs to the nation’s major hotel chains.
These companies design packages that permit hotel guests to
communicate directly with their corporations’ computers, make
airline reservations, or send flowers to a friend—all without ever
talking to anyone. It’s done via a computer keyboard connected
to the TV in a guest room.
Travelhost, a Dallas-based publisher of a travel magazine with
the same name, is testing its room automation package. Twenty￾three hotels were selected for a test program, and computer ter¬
minals were installed in 2,100 rooms. Guests using those rooms
send and receive messages from their offices and gain access to
their companies’ computers. They also have access to games
and entertainment, news and stock reports, and the electronic
edition of the Official Airline Guide.
As business people become increasingly dependent on per¬
sonal computers, it’s reasonable to assume they will come to ex¬
pect datacommunications facilities along with the usual amenities
in their hotel rooms. And with 700,000 hotel rooms in the na¬
tion’s business centers, hotel room automation is potentially a
billion-dollar-a-year business.
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“John Naisbitt has done it again! He has given us
a timely, clear-headed, jargon-free, and concise look
agsgarng trends that affect the way we live and
W KrochsS. HatS Off!”
Brentanos |e(;erS
r of In Search of Excellence
I
I
“Naisbitt’s analysis teaches us to welcome change. The
world is not changing us—we are changing the world.
This shift in analytic framework empowers, emboldens,
and inspires. When I read the headlines of the daily
newspaper, I feel alien. When I read John Naisbitt, I
am once again integrated into my culture, my country,
and my life.”
—Paul Hawken
author of The Next Economy
“The Year Ahead: 1985 should be must reading for
corporate planners and managers. They need to learn
why it’s important to redesign companies around
people and to pay attention not to retraining employ¬
ees, but to retraining managers. This is an incisive—
and often startling—blueprint of the trends that are
changing our world, from the coming labor shortage
to the advent of the global economy. To read it is
to be challenged.”
—Milton Moskowitz
co-author of The 100 Best Companies to Work
for in America
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