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The trouble with outsourcing

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I totally agree with the problem of outsourcing. Only simple, repetitive tasks that are easy to QA are suitable to outsource. For complex tasks, it takes more time to write the contracts and specifications for outsourcing than actually doing the tasks yourself.

By Jul 30th 2011, The Economist
Outsourcing is sometimes more hassle than it is worth

WHEN Ford’s River Rouge Plant was completed in 1928 it boasted everything it needed to turn raw materials into finished cars: 100,000 workers, 16m square feet of factory floor, 100 miles of railway track and its own docks and furnaces. Today it is still Ford’s largest plant, but only a shadow of its former glory. Most of the parts are made by sub-contractors and merely fitted together by the plant’s 6,000 workers. The local steel mill is run by a Russian company, Severstal.

Outsourcing has transformed global business. Over the past few decades companies have contracted out everything from mopping the floors to spotting the flaws in their internet security. TPI, a company that specialises in the sector, estimates that $100 billion-worth of new contracts are signed every year. Oxford Economics reckons that in Britain, one of the world’s most mature economies, 10% of workers toil away in “outsourced” jobs and companies spend $200 billion a year on outsourcing. Even war is being outsourced: America employs more contract workers in Afghanistan than regular troops.

Can the outsourcing boom go on indefinitely? And is the practice as useful as its advocates claim, or is the popular suspicion that it leads to cut corners and dismal service correct? There are signs that outsourcing often goes wrong, and that companies are rethinking their approach to it.

The latest TPI quarterly index of outsourcing (which measures commercial contracts of $25m or more) suggests that the total value of such contracts for the second quarter of 2011 fell by 18% compared with the second quarter of 2010. Dismal figures in the Americas (ie, mostly the United States) dragged down the average: the value of contracts there was 50% lower in the second quarter of 2011 than in the first half of 2010. This is partly explained by America’s gloomy economy, but even more by the maturity of the market: TPI suspects that much of what can sensibly be outsourced already has been.

Miles Robinson of Mayer Brown, a law firm, notes that there has also been an uptick in legal disputes over outsourcing. In one case EDS, an IT company, had to pay BSkyB, a media company, £318m ($469m) in damages. The two firms spent an estimated £70m on legal fees and were tied up in court for five months. Such nightmares are worse in India, where the courts move with Dickensian speed, or in China, where the legal system is patchy. And since many disputes stay out of court, the well of discontent with outsourcing is surely deeper than the legal record shows.

Some of the worst business disasters of recent years have been caused or aggravated by outsourcing. Eight years ago Boeing, America’s biggest aeroplane-maker, decided to follow the example of car firms and hire contractors to do most of the grunt work on its new 787 Dreamliner. The result was a nightmare. Some of the parts did not fit together. Some of the dozens of sub-contractors failed to deliver their components on time, despite having sub-contracted their work to sub-sub-contractors. Boeing had to take over some of the sub-contractors to prevent them from collapsing. If the Dreamliner starts rolling off the production line towards the end of this year, as Boeing promises, it will be billions over budget and three years behind schedule.

Outsourcing can go wrong in a colourful variety of ways. Sometimes companies squeeze their contractors so hard that they are forced to cut corners. (This is a big problem in the car industry, where a handful of global firms can bully the 80,000 parts-makers.) Sometimes vendors overpromise in order to win a contract and then fail to deliver. Sometimes both parties write sloppy contracts. And some companies undermine their overall strategies with injudicious outsourcing. Service companies, for example, contract out customer complaints to foreign call centres and then wonder why their customers hate them.

When outsourcing goes wrong, it is the devil to put right. When companies outsource a job, they typically eliminate the department that used to do it. They become entwined with their contractors, handing over sensitive material and inviting contractors to work alongside their own staff. Extricating themselves from this tangle can be tough. It is much easier to close a department than to rebuild it. Sacking a contractor can mean that factories grind to a halt, bills languish unpaid and chaos mounts.

None of this means that companies are going to re-embrace the River Rouge model any time soon. Some companies, such as Boeing, are bringing more work back in-house, in the jargon. But the business logic behind outsourcing remains compelling, so long as it is done right. Many tasks are peripheral to a firm’s core business and can be done better and more cheaply by specialists. Cleaning is an obvious example; many back-office jobs also fit the bill. Outsourcing firms offer labour arbitrage, using cheap Indians to enter data rather than expensive Swedes. They can offer economies of scale, too. TPI points out that, for all the problems in America, outsourcing is continuing to grow in emerging markets and, more surprisingly, in Europe, where Germany and France are late converts to the idea.

Companies are rethinking outsourcing, rather than jettisoning it. They are dumping huge long-term deals in favour of smaller, less rigid ones. The annualised value of “mega-relationships” worth $100m or more a year fell by 62% this year compared with last. Companies are forming relationships with several outsourcers, rather than putting all their eggs in few baskets. They are signing shorter contracts, too. But still, they need to think harder about what is their core business, and what is peripheral. And above all, newspaper editors need to say no to the temptation to outsource business columns to cheaper, hungrier writers.

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Too much information

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Applying the concept of a sprint in Agile development can help me cope with information overload. I block off a period of time, 2-3 hours, to concentration on my work. I will hide myself, disconnect from email and instant messages to avoid any interruption. I also learn that nothing cannot wait for a few hours or a day or two. You just have to set the expectation right that people cannot demand instance response from you all the time.

Jun 30th 2011, The Economist
How to cope with data overload

GOOGLE “information overload” and you are immediately overloaded with information: more than 7m hits in 0.05 seconds. Some of this information is interesting: for example, that the phrase “information overload” was popularised by Alvin Toffler in 1970. Some of it is mere noise: obscure companies promoting their services and even more obscure bloggers sounding off. The overall impression is at once overwhelming and confusing.

“Information overload” is one of the biggest irritations in modern life. There are e-mails to answer, virtual friends to pester, YouTube videos to watch and, back in the physical world, meetings to attend, papers to shuffle and spouses to appease. A survey by Reuters once found that two-thirds of managers believe that the data deluge has made their jobs less satisfying or hurt their personal relationships. One-third think that it has damaged their health. Another survey suggests that most managers think most of the information they receive is useless.

Commentators have coined a profusion of phrases to describe the anxiety and anomie caused by too much information: “data asphyxiation” (William van Winkle), “data smog” (David Shenk), “information fatigue syndrome” (David Lewis), “cognitive overload” (Eric Schmidt) and “time famine” (Leslie Perlow). Johann Hari, a British journalist, notes that there is a good reason why “wired” means both “connected to the internet” and “high, frantic, unable to concentrate”.

These worries are exaggerated. Stick-in-the-muds have always complained about new technologies: the Victorians fussed that the telegraph meant that “the businessman of the present day must be continually on the jump.” And businesspeople have always had to deal with constant pressure and interruptions—hence the word “business”. In his classic study of managerial work in 1973 Henry Mintzberg compared managers to jugglers: they keep 50 balls in the air and periodically check on each one before sending it aloft once more.

Yet clearly there is a problem. It is not merely the dizzying increase in the volume of information (the amount of data being stored doubles every 18 months). It is also the combination of omnipresence and fragmentation. Many professionals are welded to their smartphones. They are also constantly bombarded with unrelated bits and pieces—a poke from a friend one moment, the latest Greek financial tragedy the next.

The data fog is thickening at a time when companies are trying to squeeze ever more out of their workers. A survey in America by Spherion Staffing discovered that 53% of workers had been compelled to take on extra tasks since the recession started. This dismal trend may well continue—many companies remain reluctant to hire new people even as business picks up. So there will be little respite from the dense data smog, which some researchers fear may be poisonous.

They raise three big worries. First, information overload can make people feel anxious and powerless: scientists have discovered that multitaskers produce more stress hormones. Second, overload can reduce creativity. Teresa Amabile of Harvard Business School has spent more than a decade studying the work habits of more than 9,000 people. She finds that focus and creativity are connected. People are more likely to be creative if they are allowed to focus on something for some time without interruptions. If constantly interrupted or forced to attend meetings, they are less likely to be creative. Third, overload can also make workers less productive. David Meyer, of the University of Michigan, has shown that people who complete certain tasks in parallel take much longer and make many more errors than people who complete the same tasks in sequence.

What can be done about information overload? One answer is technological: rely on the people who created the fog to invent filters that will clean it up. Xerox promises to restore “information sanity” by developing better filtering and managing devices. Google is trying to improve its online searches by taking into account more personal information. (Some people fret that this will breach their privacy, but it will probably deliver quicker, more accurate searches.) A popular computer program called “Freedom” disconnects you from the web at preset times.

A second answer involves willpower. Ration your intake. Turn off your mobile phone and internet from time to time.

But such ruses are not enough. Smarter filters cannot stop people from obsessively checking their BlackBerrys. Some do so because it makes them feel important; others because they may be addicted to the “dopamine squirt” they get from receiving messages, as Edward Hallowell and John Ratey, two academics, have argued. And self-discipline can be counter-productive if your company doesn’t embrace it. Some bosses get shirty if their underlings are unreachable even for a few minutes.

Most companies are better at giving employees access to the information superhighway than at teaching them how to drive. This is starting to change. Management consultants have spotted an opportunity. Derek Dean and Caroline Webb of McKinsey urge businesses to embrace three principles to deal with data overload: find time to focus, filter out noise and forget about work when you can. Business leaders are chipping in. David Novak of Yum! Brands urges people to ask themselves whether what they are doing is constructive or a mere “activity”. John Doerr, a venture capitalist, urges people to focus on a narrow range of objectives and filter out everything else. Cristobal Conde of SunGard, an IT firm, preserves “thinking time” in his schedule when he cannot be disturbed. This might sound like common sense. But common sense is rare amid the cacophony of corporate life.

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3D Printing, The printed world

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This is the end of Bandai. Who would buy over priced plastic model if you can print your own Gundam? Probably it will be the end of ToyR’us too.

By Feb 10th 2011, Economist
Three-dimensional printing from digital designs will transform manufacturing and allow more people to start making things

FILTON, just outside Bristol, is where Britain’s fleet of Concorde supersonic airliners was built. In a building near a wind tunnel on the same sprawling site, something even more remarkable is being created. Little by little a machine is “printing” a complex titanium landing-gear bracket, about the size of a shoe, which normally would have to be laboriously hewn from a solid block of metal. Brackets are only the beginning. The researchers at Filton have a much bigger ambition: to print the entire wing of an airliner.

Far-fetched as this may seem, many other people are using three-dimensional printing technology to create similarly remarkable things. These include medical implants, jewellery, football boots designed for individual feet, lampshades, racing-car parts, solid-state batteries and customised mobile phones. Some are even making mechanical devices. At the Massachusetts Institute of Technology (MIT), Peter Schmitt, a PhD student, has been printing something that resembles the workings of a grandfather clock. It took him a few attempts to get right, but eventually he removed the plastic clock from a 3D printer, hung it on the wall and pulled down the counterweight. It started ticking.

Engineers and designers have been using 3D printers for more than a decade, but mostly to make prototypes quickly and cheaply before they embark on the expensive business of tooling up a factory to produce the real thing. As 3D printers have become more capable and able to work with a broader range of materials, including production-grade plastics and metals, the machines are increasingly being used to make final products too. More than 20% of the output of 3D printers is now final products rather than prototypes, according to Terry Wohlers, who runs a research firm specialising in the field. He predicts that this will rise to 50% by 2020.

Using 3D printers as production tools has become known in industry as “additive” manufacturing (as opposed to the old, “subtractive” business of cutting, drilling and bashing metal). The additive process requires less raw material and, because software drives 3D printers, each item can be made differently without costly retooling. The printers can also produce ready-made objects that require less assembly and things that traditional methods would struggle with—such as the glove pictured above, made by Within Technologies, a London company. It can be printed in nylon, stainless steel or titanium.

The printing of parts and products has the potential to transform manufacturing because it lowers the costs and risks. No longer does a producer have to make thousands, or hundreds of thousands, of items to recover his fixed costs. In a world where economies of scale do not matter any more, mass-manufacturing identical items may not be necessary or appropriate, especially as 3D printing allows for a great deal of customisation. Indeed, in the future some see consumers downloading products as they do digital music and printing them out at home, or at a local 3D production centre, having tweaked the designs to their own tastes. That is probably a faraway dream. Nevertheless, a new industrial revolution may be on the way.

Printing in 3D may seem bizarre. In fact it is similar to clicking on the print button on a computer screen and sending a digital file, say a letter, to an inkjet printer. The difference is that the “ink” in a 3D printer is a material which is deposited in successive, thin layers until a solid object emerges.

The layers are defined by software that takes a series of digital slices through a computer-aided design. Descriptions of the slices are then sent to the 3D printer to construct the respective layers. They are then put together in a number of ways. Powder can be spread onto a tray and then solidified in the required pattern with a squirt of a liquid binder or by sintering it with a laser or an electron beam. Some machines deposit filaments of molten plastic. However it is achieved, after each layer is complete the build tray is lowered by a fraction of a millimetre and the next layer is added.
And when you’re happy, click print

The researchers at Filton began using 3D printers to produce prototype parts for wind-tunnel testing. The group is part of EADS Innovation Works, the research arm of EADS, a European defence and aerospace group best known for building Airbuses. Prototype parts tend to be very expensive to make as one-offs by conventional means. Because their 3D printers could do the job more efficiently, the researchers’ thoughts turned to manufacturing components directly.

Aircraft-makers have already replaced a lot of the metal in the structure of planes with lightweight carbon-fibre composites. But even a small airliner still contains several tonnes of costly aerospace-grade titanium. These parts have usually been machined from solid billets, which can result in 90% of the material being cut away. This swarf is no longer of any use for making aircraft.

To make the same part with additive manufacturing, EADS starts with a titanium powder. The firm’s 3D printers spread a layer about 20-30 microns (0.02-0.03mm) thick onto a tray where it is fused by lasers or an electron beam. Any surplus powder can be reused. Some objects may need a little machining to finish, but they still require only 10% of the raw material that would otherwise be needed. Moreover, the process uses less energy than a conventional factory. It is sometimes faster, too.

There are other important benefits. Most metal and plastic parts are designed to be manufactured, which means they can be clunky and contain material surplus to the part’s function but necessary for making it. This is not true of 3D printing. “You only put material where you need to have material,” says Andy Hawkins, lead engineer on the EADS project. The parts his team is making are more svelte, even elegant. This is because without manufacturing constraints they can be better optimised for their purpose. Compared with a machined part, the printed one is some 60% lighter but still as sturdy.

Lightness is critical in making aircraft. A reduction of 1kg in the weight of an airliner will save around $3,000-worth of fuel a year and by the same token cut carbon-dioxide emissions. Additive manufacturing could thus help build greener aircraft—especially if all the 1,000 or so titanium parts in an airliner can be printed. Although the size of printable parts is limited for now by the size of 3D printers, the EADS group believes that bigger systems are possible, including one that could fit on the 35-metre-long gantry used to build composite airliner wings. This would allow titanium components to be printed directly onto the structure of the wing.

Many believe that the enhanced performance of additively manufactured items will be the most important factor in driving the technology forward. It certainly is for MIT’s Mr Schmitt, whose interest lies in “original machines”. These are devices not constructed from a collection of prefabricated parts, but created in a form that flows from the intention of the design. If that sounds a bit arty, it is: Mr Schmitt is a former art student from Germany who used to cadge time on factory lathes and milling machines to make mechanised sculptures. He is now working on novel servo mechanisms, the basic building blocks for robots. Custom-made servos cost many times the price of off-the-shelf ones. Mr Schmitt says it should be possible for a robot builder to specify what a servo needs to do, rather than how it needs to be made, and send that information to a 3D printer, and for the machine’s software to know how to produce it at a low cost. “This makes manufacturing more accessible,” says Mr Schmitt.

The idea of the 3D printer determining the form of the items it produces intrigues Neri Oxman, an architect and designer who heads a research group examining new ways to make things at MIT’s Media Lab. She is building a printer to explore how new designs could be produced. Dr Oxman believes the design and construction of objects could be transformed using principles inspired by nature, resulting in shapes that are impossible to build without additive manufacturing. She has made items from sculpture to body armour and is even looking at buildings, erected with computer-guided nozzles that deposit successive layers of concrete.

Some 3D systems allow the properties and internal structure of the material being printed to be varied. This year, for instance, Within Technologies expects to begin offering titanium medical implants with features that resemble bone. The company’s femur implant is dense where stiffness and strength is required, but it also has strong lattice structures which would encourage the growth of bone onto the implant. Such implants are more likely to stay put than conventional ones.

Working at such a fine level of internal detail allows the stiffness and flexibility of an object to be determined at any point, says Siavash Mahdavi, the chief executive of Within Technologies. Dr Mahdavi is working on other lattice structures, including aerodynamic body parts for racing cars and special insoles for a firm that hopes to make the world’s most comfortable stiletto-heeled shoes.

Digital Forming, a related company (where Dr Mahdavi is chief technology officer), uses 3D design software to help consumers customise mass-produced products. For example, it is offering a service to mobile-phone companies in which subscribers can go online to change the shape, colour and other features of the case of their new phone. The software keeps the user within the bounds of the achievable. Once the design is submitted the casing is printed. Lisa Harouni, the company’s managing director, says the process could be applied to almost any consumer product, from jewellery to furniture. “I don’t have any doubt that this technology will change the way we manufacture things,” she says.

Other services allow individuals to upload their own designs and have them printed. Shapeways, a New York-based firm spun out of Philips, a Dutch electronics company, last year, offers personalised 3D production, or “mass customisation”, as Peter Weijmarshausen, its chief executive, describes it. Shapeways prints more than 10,000 unique products every month from materials that range from stainless steel to glass, plastics and sandstone. Customers include individuals and shopkeepers, many ordering jewellery, gifts and gadgets to sell in their stores.

EOS, a German supplier of laser-sintering 3D printers, says they are already being used to make plastic and metal production parts by carmakers, aerospace firms and consumer-products companies. And by dentists: up to 450 dental crowns, each tailored for an individual patient, can be manufactured in one go in a day by a single machine, says EOS. Some craft producers of crowns would do well to manage a dozen a day. As an engineering exercise, EOS also printed the parts for a violin using a high-performance industrial polymer, had it assembled by a professional violin-maker and played by a concert violinist.

Both EOS and Stratasys, a company based in Minneapolis which makes 3D printers that employ plastic-deposition technology, use their own machines to print parts that are, in turn, used to build more printers. Stratasys is even trying to print a car, or at least the body of one, for Kor Ecologic, a company in Winnipeg, whose boss, Jim Kor, is developing an electric-hybrid vehicle called Urbee.
Jim Kor’s printed the model. Next, the car

Making low-volume, high-value and customised components is all very well, but could additive manufacturing really compete with mass-production techniques that have been honed for over a century? Established techniques are unlikely to be swept away, but it is already clear that the factories of the future will have 3D printers working alongside milling machines, presses, foundries and plastic injection-moulding equipment, and taking on an increasing amount of the work done by those machines.

Morris Technologies, based in Cincinnati, was one of the first companies to invest heavily in additive manufacturing for the engineering and production services it offers to companies. Its first intention was to make prototypes quickly, but by 2007 the company says it realised “a new industry was being born” and so it set up another firm, Rapid Quality Manufacturing, to concentrate on the additive manufacturing of higher volumes of production parts. It says many small and medium-sized components can be turned from computer designs into production-quality metal parts in hours or days, against days or weeks using traditional processes. And the printers can build unattended, 24 hours a day.

Neil Hopkinson has no doubts that 3D printing will compete with mass manufacturing in many areas. His team at Loughborough University has invented a high-speed sintering system. It uses inkjet print-heads to deposit infra-red-absorbing ink on layers of polymer powder which are fused into solid shapes with infra-red heating. Among other projects, the group is examining the potential for making plastic buckles for Burton Snowboards, a leading American producer of winter-sports equipment. Such items are typically produced by plastic injection-moulding. Dr Hopkinson says his process can make them for ten pence (16 cents) each, which is highly competitive with injection-moulding. Moreover, the designs could easily be changed without Burton incurring high retooling costs.

Predicting how quickly additive manufacturing will be taken up by industry is difficult, adds Dr Hopkinson. That is not necessarily because of the conservative nature of manufacturers, but rather because some processes have already moved surprisingly fast. Only a few years ago making decorative lampshades with 3D printers seemed to be a highly unlikely business, but it has become an industry with many competing firms and sales volumes in the thousands.

Dr Hopkinson thinks Loughborough’s process is already competitive with injection-moulding at production runs of around 1,000 items. With further development he expects that within five years it would be competitive in runs of tens if not hundreds of thousands. Once 3D printing machines are able to crank out products in such numbers, then more manufacturers will look to adopt the technology.

Will Sillar of Legerwood, a British firm of consultants, expects to see the emergence of what he calls the “digital production plant”: firms will no longer need so much capital tied up in tooling costs, work-in-progress and raw materials, he says. Moreover, the time to take a digital design from concept to production will drop, he believes, by as much as 50-80%. The ability to overcome production constraints and make new things will combine with improvements to the technology and greater mechanisation to make 3D printing more mainstream. “The market will come to the technology,” Mr Sillar says.

Some in the industry believe that the effect of 3D printing on manufacturing will be analogous to that of the inkjet printer on document printing. The written word became the printed word with the invention of movable-type printing by Johannes Gutenberg in the 15th century. Printing presses became like mass-production machines, highly efficient at printing lots of copies of the same thing but not individual documents. The inkjet printer made that a lot easier, cheaper and more personal. Inkjet devices now perform a multitude of printing roles, from books on demand to labels and photographs, even though traditional presses still roll for large runs of books, newspapers and so on.

How would this translate to manufacturing? Most obviously, it changes the economics of making customised components. If a company needs a specialised part, it may find it cheaper and quicker to have the part printed locally or even to print its own than to order one from a supplier a long way away. This is more likely when rapid design changes are needed.

Printing in 3D is not the preserve of the West: Chinese companies are adopting the technology too. Yet you might infer that some manufacturing will return to the West from cheap centres of production in China and elsewhere. This possibility was on the agenda of a conference organised by DHL last year. The threat to the logistics firm’s business is clear: why would a company airfreight an urgently needed spare part from abroad when it could print one where it is required?
Our TQ article explains the technology behind the 3-D printing process

Perhaps the most exciting aspect of additive manufacturing is that it lowers the cost of entry into the business of making things. Instead of finding the money to set up a factory or asking a mass-producer at home (or in another country) to make something for you, 3D printers will offer a cheaper, less risky route to the market. An entrepreneur could run off one or two samples with a 3D printer to see if his idea works. He could make a few more to see if they sell, and take in design changes that buyers ask for. If things go really well, he could scale up—with conventional mass production or an enormous 3D print run.

This suggests that success in manufacturing will depend less on scale and more on the quality of ideas. Brilliance alone, though, will not be enough. Good ideas can be copied even more rapidly with 3D printing, so battles over intellectual property may become even more intense. It will be easier for imitators as well as innovators to get goods to market fast. Competitive advantages may thus be shorter-lived than ever before. As with past industrial revolutions, the greatest beneficiaries may not be companies but their customers. But whoever gains most, revolution may not be too strong a word.

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Turning garbage into gas

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Why burn or bury garbage when you can vaporize them and turn garbage into electricity? This is the solution for landfill.

Feb 3rd 2011, Economist
Atomising trash eliminates the need to dump it, and generates useful power too

DISPOSING of household rubbish is not, at first glance, a task that looks amenable to high-tech solutions. But Hilburn Hillestad of Geoplasma, a firm based in Atlanta, Georgia, begs to differ. Burying trash—the usual way of disposing of the stuff—is old-fashioned and polluting. Instead, Geoplasma, part of a conglomerate called the Jacoby Group, proposes to tear it into its constituent atoms with electricity. It is clean. It is modern. And, what is more, it might even be profitable.

For years, some particularly toxic types of waste, such as the sludge from oil refineries, have been destroyed with artificial lightning from electric plasma torches—devices that heat matter to a temperature higher than that of the sun’s surface. Until recently this has been an expensive process, costing as much as $2,000 per tonne of waste, according to SRL Plasma, an Australian firm that has manufactured torches for 13 of the roughly two dozen plants around the world that work this way.

Now, though, costs are coming down. Moreover, it has occurred to people such as Dr Hillestad that the process could be used to generate power as well as consuming it. Appropriately tweaked, the destruction of organic materials (including paper and plastics) by plasma torches produces a mixture of carbon monoxide and hydrogen called syngas. That, in turn, can be burned to generate electricity. Add in the value of the tipping fees that do not have to be paid if rubbish is simply vaporised, plus the fact that energy prices in general are rising, and plasma torches start to look like a plausible alternative to burial.
Related topics

The technology has got better, too. The core of a plasma torch is a pair of electrodes, usually made from a nickel-based alloy. A current arcs between them and turns the surrounding air into a plasma by stripping electrons from their parent atoms. Waste (chopped up into small pieces if it is solid) is fed into this plasma. The heat and electric charges of the plasma break the chemical bonds in the waste, vaporising it. Then, if the mix of waste is correct, the carbon and oxygen atoms involved recombine to form carbon monoxide and the hydrogen atoms link up into diatomic hydrogen molecules. Both of these are fuels (they burn in air to form carbon dioxide and water, respectively). Metals and other inorganic materials that do not turn into gas fall to the bottom of the chamber as molten slag. Once it has cooled, this slag can be used to make bricks or to pave roads.

Electric arcs are a harsh environment to operate in, and early plasma torches were not noted for reliability. These days, though, the quality of the nickel alloys has improved so that the torches work continuously. On top of that, developments in a field called computational fluid dynamics allow the rubbish going into the process to be mixed in a way that produces the most syngas for the least input of electricity.

The first rubbish-to-syngas plants were built almost a decade ago, in Japan—where land scarcity means tipping fees are particularly high. Now the idea is moving elsewhere. This year Geoplasma plans to start constructing a plant costing $120m in St Lucie County, Florida. It will be fed with waste from local households and should create enough syngas to make electricity for more than 20,000 homes. The company reckons it can make enough money from the project to service the debt incurred in constructing the plant and still provide a profit from the beginning.

Nor is Geoplasma alone. More than three dozen other American firms are proposing plasma-torch syngas plants, according to Gershman, Brickner & Bratton, a waste consultancy based in Fairfax, Virginia. Demand is so great that the Westinghouse Plasma Corporation, an American manufacturer of plasma torches, is able to hire out its test facility in Madison, Pennsylvania, for $150,000 a day.

Syngas can also be converted into other things. The “syn” is short for “synthesis” and syngas was once an important industrial raw material. The rise of the petrochemical industry has rather eclipsed it, but it may become important again. One novel proposal, by Coskata, a firm based in Warrenville, Illinois, is to ferment it into ethanol, for use as vehicle fuel. At the moment Coskata uses a plasma torch to make syngas from waste wood and wood-pulp, but modifying the apparatus to take household waste should not be too hard.

Even if efforts to convert such waste into syngas fail, existing plants that use plasma torches to destroy more hazardous material could be modified to take advantage of the idea. The Beijing Victex Environmental Science and Technology Development Company, for example, uses the torches to destroy sludge from Chinese oil refineries. According to Fiona Qian, the firm’s deputy manager, the high cost of doing this means some refineries are still dumping toxic waste in landfills. Stopping that sort of thing by bringing the price down would be a good thing by itself.

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Which MBA? Think twice

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According to Economist, studying MBA is not a good investment. So I should be glad that MBA school rejected my application.

2 Feb 2011, Economist
Set your heart on an MBA? Philip Delves Broughton suggests a radical alternative: don’t bother

Business schools have long sold the promise that, like an F1 driver zipping into the pits for fresh tyres, it just takes a short hiatus on an MBA programme and you will come roaring back into the career race primed to win. After all, it signals to companies that you were good enough to be accepted by a decent business school (so must be good enough for them); it plugs you into a network of fellow MBAs; and, to a much lesser extent, there’s the actual classroom education. Why not just pay the bill, sign here and reap the rewards?

The problem is that these days it doesn’t work like that. Rather, more and more students are finding the promise of business schools to be hollow. The return on investment on an MBA has gone the way of Greek public debt. If you have a decent job in your mid- to late- 20s, unless you have the backing of a corporate sponsor, leaving it to get an MBA is a higher risk than ever. If you are getting good business experience already, the best strategy is to keep on getting it, thereby making yourself ever more useful rather than groping for the evanescent brass rings of business school.

Business schools argue that a recession is the best time to invest in oneself. What they won’t say is that they also need your money. There are business academics right now panting for your cheque. They need it to pad their sinecures and fund their threadbare research. There is surely no more oxymoronic profession than the tenured business-school professor, and yet these job-squatting apostles of the free market are rife and desperate. Potential students should take note: if taking a professional risk were as marvellous as they say, why do these role models so assiduously avoid it?

Harvard Business School recently chose a new dean, Nitin Nohria, an expert in ethics and leadership. He was asked by Bloomberg Businessweek if he had watched the Congressional hearings on Goldman Sachs. He replied: “The events in the financial sector are something that we have watched closely at Harvard Business School. We teach by the case method, and one of the things we’ll do through this experience is study these cases deeply as information is revealed over time so we can understand what happened at all these financial firms. I’m sure that at some point we’ll write cases about Goldman Sachs because that’s how we learn.” He could have stood up for Goldman or criticised it. Instead he punted on one of the singular business issues of our time. It is indicative of the cringing attitude of business schools before the business world they purport to study.

When you look at today’s most evolved business organisms, it is obvious that an MBA is not required for business success. Apple, which recently usurped Microsoft as the world’s largest technology firm (by market capitalisation), has hardly any MBAs among its top ranks. Most of the world’s top hedge funds prefer seasoned traders, engineers and mathematicians, people with insight and programming skills, to MBAs brandishing spreadsheets, the latest two-by-twos and the guilt induced by some watery ethics course.

In the BRIC economies, one sees fortunes being made in the robust manner of the 19th-century American robber barons, with scarcely a nod to the niceties of MBA programmes. The cute stratagems and frameworks taught at business schools become quickly redundant in the hurly-burly of economic change. I’ve often wondered what Li Ka-Shing of Hong Kong or Stanely Ho of Macao, or Rupert Murdoch, for that matter, would make of an MBA programme. They would probably see it for what it is: a business opportunity. And as such, they would focus on the value of investing in it.

They would look at the high cost, and note the tables which show that financial rewards are not evenly distributed among MBAs but tilt heavily to those from the very top programmes who tend to go into finance and consulting. Successful entrepreneurs are as rare among MBAs as they are in the general population.

They would think to themselves that business is fundamentally about two things, innovating and selling, and that most MBA programmes teach neither. They might wonder about the realities of the MBA network. There is no point acquiring a global network of randomly assembled business students if you just want to work in your home town. Also, they will recall that the most effective way to build a network is not to go to school, but to be successful. That way you will have all the MBA friends you could ever want.

They might even meet a few business academics and wonder. Then they would take their application and do with it what most potential applicants should: toss it away.