JimPinto.com - Connections for Growth & Success™
No. 226 : 23 March 2007

Keeping an eye on technology futures.
Business commentary - no hidden agendas.
New attitudes, no platitudes.

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12 mins.

Infosys - global growth with a conscience

Infosys is one of the largest software companies in the world - 69,000 people, revenues (fiscal-year 2006-07) about $ 3B, NASDAQ market-cap about $ 30B, continuing strong growth.

During a family visit to Bangalore, India last month (Feb. 2007) I visited Infosys' corporate headquarters along with my brother John Pinto and nephew Deepak Pinto (3 Pintos together).

We were welcomed in the main corporate office building, the same one where Tom Friedman of the N.Y. Times was introduced to this unusual company in a way that impressed him enough to inspire the concept of his bestselling book, "The World is Flat". We too saw the impressive multi-media presentation on 3 giant TV screens in front of us, and below a lighted map of the entire campus which houses some 15,000 people in a vast building complex. Like Tom Friedman, we were impressed.

I like to pose rapid-fire questions, which I did on many different topics – technical, financial, marketing, sales distribution, recruitment, motivation, etc. All were answered with passionate directness. The remarkable thing was that questions to each person were answered directly - no hesitation, no sideways glances to look for the senior manager's approval. I was impressed.

We went on a tour. I've visited the Microsoft campus in Redmond, WA. and Google's campus in Mountain View, CA. Infosys' was larger and more impressive. Considering that we had just come through Bangalore traffic through the overcrowded highways, the contrast was nothing short of amazing. Here were beautiful streets between many huge, impressively architected buildings in park-like surroundings reminiscent of a university setting. We were ferried around in one of several golf-cart-like cars – it was clearly too far to walk. Employees simply took any available bicycle from several bicycle racks to ride between buildings.

There were swimming pools and tennis courts, set amidst lawns and impeccable landscaping. There were pool tables and exercise machines, with restaurants and banks with ATM machines. This was truly the heart of Bangalore's "Electronic City". At the end of our visit, we were taken to the company store where we could select any Infosys-logo product as a gift to commemorate our visit. I wear my shirt to show off my Infosys connections.

Infosys' founders have laid the groundwork for strong growth to continue over the next several years. My complete article on this significant company has been published by Automation.com as part of their continuing Corporate Culture series. (weblink below)

Why does the title include, "with a conscience" ? Hey, read the article...

Related Links:

Click Automation.com: Infosys - global growth with a conscience

Click Podcast: Gary Mintchell talks with Jim Pinto about Infosys

Click Forbes: Infosys Surfs The Offshoring Wave

Click Infosys builds a realistic dream

Click Pinto visit to Bangalore, India, February 2007

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Schneider growth & expansion continues

Schneider, the aggressive French giant, has posted its 2006 annual results, making it a clear No. 3 in the automation business, after Siemens and ABB. Here are some highlights:
  • Revenues $18B, 18% growth
  • Profit: $2.7B, 28% growth
  • Organic sales growth: 10.7%
  • Average annual organic sales growth (3 years): 9%
  • Operating margin: 14.6%, up 1.2%
  • Earnings per share: up 31%
  • Dividend: up 33%
Schneider reports that growth comes through geographical coverage, plus R&D and innovation and new businesses. During 2006, organic (non-acquisition) sales growth by geographical region was:
  • Europe +9.6%
  • North America +7.5%
  • Asia Pacific +15.7%
  • Rest of World +17.6%
Sales Breakdown: 63% Electrical Distribution; 32% Automation & Control 5% Critical Power (APC acquisition Feb 2007).

Key strengths:

  • Leading positions in Power & Control
  • Wide geographical coverage with strong local presence
  • Capacity to play a consolidation role through acquisitions
Schneider is investing heavily in fast-growth emerging countries: Eastern Europe, S. America, Africa & the Middle-East, India, China and Asia Pacific. The contribution of emerging countries to Group sales has grown to 31% in 2006.

About 5% of revenue is invested in R&D. There are 6,500 R&D team members in 25 countries, with consolidation in high-tech countries. There are 60 Application Centers in 18 countries, plus R&D partnerships with 50 private university labs.

Schneider's 2007 Mantras:

  • Quality, customer satisfaction (and emotion!) first
  • Priority for solutions - Energy Efficiency, Critical Power
  • Automation: strategic and execution shift
Schneider continues to move aggressively with strong acquisitions. Unlike Siemens and some others, it doesn't screw them up. The aggressive French giant has no serious market share in process controls and, if it chooses to, is certainly one of the very few which has the bucks to accomplish an acquisition of Invensys (Foxboro/Wonderware). At the very least, look for Schneider to pull off some good strategic acquisitions in 2007.

Related links:

Click Schneider Electric Homepage

Click Schneider Electric - Wikipedia Overview

Click Schneider Electric – Aggressive French Giant

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The roots of Automation Innovation

Since automation is such a fragmented business, most innovation comes from start-ups. The major companies all have a conglomeration of products, each with relatively small volume, but lumped together to form sizeable businesses. Indeed, many mini-conglomerates thrive through astute and shrewd accumulation of innovative niche players.

An exception to the startup-innovation rule was distributed control systems (DCS), a mix of several important innovations developed in the early 1970's by a team of engineers within Honeywell. This generated a new category which achieved $100m annual revenue within just a couple of years, and the segment has since expanded to several billions of dollars worldwide.

The other major automation segment to achieve significance, also in the 1970’s, was the programmable logic controller (PLC). This breakthrough innovation was the brainchild of the prolific inventor Dick Morley, who was with Bedford Associates, a small development company that worked for Modicon (now part of Schneider).

Fisher Controls was started by Bill Fisher, making innovative valves and actuators. Rosemount grew through innovations in differential pressure sensors. Interestingly, both Rosemount and Fisher tried to grow by branching out into DCS, but their offerings were relatively insignificant till Emerson put them together with PCs and Software (Intellution and other ingredients) to generate leadership with Delta V.

Take a look at my article on Automation Innovation in the March 2007 issue of Automation World (link below).

Related links:

Click Automation World – Roots of Automation Innovation

Click The Culture of Innovation

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U.S. Education declines through 'asymmetric motivation'

The US education system continues to fall behind. America ranks 16th among 27 countries with democratic governments, when looking at the percentage of 18- to 24-year-olds who complete college.

US students have become soft when compared against those of China, Russia and India. This is yet another twist on the old "asymmetric motivation" theme - "You can't simulate hunger".

With the "No Child Left Behind" policy, the US has tried to correct the situation by forcing schools to meet performance metrics. A few years have been spent trying to bring students' math and reading skills up to basic levels by having them pass standardized tests. Failed schools may be restructured, while non-performing students may receive free tutors and be moved to new schools. No one sees the basic point - motivation is not there. Many students are more interested in MTV and iPods. They'd rather be rock-stars and sports heroes; few want to be "nerds" or "geeks".

India and China can't be ignored - they are like elephants in the living room. They have 40% of the world population, have rich cultures and histories, and aspire to superpower status. They have growing middle classes that are major global markets, and they are major producers. Both have made information technology and the Internet their high priorities.

The proliferation of software companies in India, and high-tech manufacturing in China, are key demonstrations of rapid human development through technology. At the same time millions in Eastern Europe and the Far East are also waking up, and they are giving the rest of the world a run for their money.

America's salvation is its eclectic population, the winning drive of its entrepreneurs, plus the upward mobility of hungry immigrants who are building a place for themselves in the American dream.

Related links:

Click US students lack hunger

Click Is the U.S. really falling behind China and India in education?

Click U.S. falls behind in education

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Oil & Al-Quaeda

Gasoline has now climbed over $3 a gallon in the US. Most of us grumble while we fill up. But we have no choice. Or do we?

Many think that America is in Iraq because of oil. To those who think that Oil is NOT a motivating factor, consider whether or not the US would be there if Iraq had no oil. I leave you to answer with your own logic and sensibilities. But also, consider this: Why does America continue to use Mid-East oil?

Frank Denton has a PhD in foreign affairs. He is the author of "Knowing the Roots of War" and several other important books. He spent a decade with the RAND Corp. before joining the US Foreign Service to serve in Afghanistan, Jordan, Egypt and the Philippines as well as in Washington. He has just written an important white-paper which I urge you to read (weblink below). You’ll find a pdf-file, if you wish to print for future reading (17 pages).

Says Frank Denton: Oil provides revenues for the Fundamentalists. An examination of the economies of Middle Eastern nations shows that the removal of oil revenues will render them politically inert. Recognizing this economic weakness, a global embargo of all Middle East oil imports is an attractive means for defeating Al Quaeda.

We must respond to this crisis by initiating meaningful developments for an environmentally sustainable energy future. Severely curtailing and then eliminating the reliance on Middle East oil will decimate the Islamic terrorists by cutting off both their emotional and financial support.

Here is a new depth of insight into the connection between oil wealth and terrorism. Frank Denton's paper makes energy independence an imperative to achieve national security. He calls for a national debate to take on the issues of Iraq, the War on Terror, and the development of alternative energy sources for national good.

Related links:

Click Frank Denton - Nexus—OIL and AL Quaeda

Click Lessons from the History of the Politics of Warfare

Click Al Quaeda's Oil Weapon

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Urged on, Eoin Ó Riain [readout@iol.ie] expands on his comments about what exactly is 'typical American':
    "The typical Brit is monolingual, thinks everyone will understand him if he shouts louder in English and believes firmly that the real world ends at the entrance to the Euro tunnel (which should never have been built as it makes it more easy for foreigners to get into England.)

    "The typical American is gullible, lacks subtlety, cannot read between lines, has the most perfect knowledge of what is the best form of government for the world, has lots of money, is old and grey haired, has a terrible sense of dress and an alarming inability to hear what others are saying - example, the former Secretary of Defense.

    "I remember the first time I visited the US and made some statements in the same way as I would make them in Britain or in Mainland Europe. I was quite alarmed that my statements were accepted almost without question. In Europe you have to make your case every time. What this means is that I had to tone down what I said unless I was absolutely certain of my facts. If I made a statement which was later found to be incorrect, then my credibility would be destroyed for life. Americans believe you; Europeans doubt you. This means that Europeans are more inclined to wait and assess; Americans go and do.

    "Global, Worldwide and International ought to mean the same thing. In America, I have found that 'International' means the whole world outside of North America. Canada is regarded as a poor, second cousin, but not international. In view of NAFTA, Europeans are amused that Americans include Mexico as International.

    "These are just a few imperfect and fairly scattered scribblings on my thoughts. Note that the effect of Chinese and Indian contributions haven't yet been considered."

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Martin Greenwood [Martin.Greenwood@iesystems.com.au] from Australia suggests that the elected Presidency is a flaw in the US constitution:

    "I am an admirer of the Declaration of Independence (the most important document ever drafted in the English language, with one of the most magnificent and memorable opening lines ever). We must always be grateful that America showed the world that democracy was not only possible, but desirable. It was an heroic achievement, given that the conventional wisdom at the time was that Democracy was a nice idea but totally impractical. It was assumed that the new nation would soon descend into chaos.

    "However, we should not be surprised, given the circumstances under which it was written, that the US constitution was flawed. Indeed, precisely because it was the first modern democracy, we should expect it to be less than ideal. America should be capable of learning from history and experience.

    "To those of us in a Parliamentary Democracy based on the British model, it never ceases to amaze that the US Government, now among the largest and most powerful bureaucracies in the world, is based entirely on the election of one individual. His deputy, whether good or bad, is just along for the ride.

    "Given that all Presidents and all Prime Ministers are humans, and that all humans are imperfect, it is unreasonable to expect that there exists anywhere an individual competent to be an ideal President.

    "The big flaw is the separation between Government and Legislature, and the separation of electing the President from electing the Legislature, combined with a rigidly fixed term of office. It seemed like a good idea at the time the Constitution was written. The founding fathers could not have imagined the size of the current US Government.

    "Most importantly, if America discovers that it has a disastrous President - or even a criminal one - there is no effective and timely mechanism to remove him from office. And even then, there would be a power vacuum until the next Presidential election.

    "Britain has (in my opinion) made a mistake by adopting a presidential style election of the Prime Minister at the party conference. Tony Blair survived a vote of no-confidence in Parliament, but only with the support of the Opposition(!!). If only they had been able to tell Blair to pull his head in, maybe GW Bush would have not started the disastrous war that now consumes not only his Presidency, but America and the world. If only...."

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Harry Ebbeson [hlestringman@hotmail.com] complains about energy mismanagement:

    "I am really tired of being accused of energy mismanagement. I have to manage my energy usage because it is expensive. I walk or ride a bike when I can. I keep my thermostat down because natural gas is costly. I don't listen to these self appointed pundits who spout out what I should do.

    "Paying additional taxes is not the answer, I heard the same line of bull when the last round of taxes went into effect. It was going to solve the problem then - just as they claim now. Giving more taxes to a bureaucracy is like putting gasoline on a fire. The sole purpose of a bureaucracy is to proliferate itself and grow. All the money paid in taxes in Europe over the last several decades should have gotten them almost totally energy independent. Instead they have near-welfare states.

    "In the US, the oil companies were given special tax incentives to find and produce gas and oil within the US. They did that, and now they make huge profits and those same incentives are now called 'giveaways to big oil'.

    "So I end my rant - but I can tell you that many people feel the same way and are tired of being blamed for something they did not start, continue nor endorse. If Al Gore were so concerned, why was this not a platform of his first election bid? Why, because he has seen a political reason to continue his 'relevance'. GW Bush has already indicated his priorities and allegiances - to Oil."

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