TIME Innovation

Five Best Ideas of the Day: November 19

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. Teach data literacy in elementary school.

By Mohana Ravindranath in the Washington Post

2. A new app lets kids explore the life and living conditions of other children around the world.

By Laura Bliss in CityLab

3. Politics inside Yemen — once a reliable U.S. ally and success story in the war on terror — has pushed the nation out of our influence.

By Adam Baron in Defense One

4. When it comes to science and health news, radio might save journalism.

By Anna Clark in Columbia Journalism Review

5. Rooftop solar power could beat the price of coal in two years — if utilities don’t shut it down.

By Lucas Mearian in ComputerWorld

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

TIME Companies

Uber Investigating Executive Over Use of ‘God View’ to Spy on User

After spate of bad publicity

Uber said Tuesday that it’s investigating one of its top New York executives for tracking a reporter without her permission.

The ride-sharing App has a system known as “God View,” BuzzFeed reports, in which the location of Uber vehicles and waiting customers are “widely available to corporate employees.” BuzzFeed reports that an executive used this system to track one of its reporters while she was working on a story about the company that has put it under fire for revelations that an executive raised the prospect of investigating journalists.

Early this November, one of the reporters of this story, Johana Bhuiyan, arrived to Uber’s New York headquarters in Long Island City for an interview with Josh Mohrer, the general manager of Uber New York. Stepping out of her vehicle — an Uber car — she found Mohrer waiting for her. “There you are,” he said, holding his iPhone and gesturing at it. “I was tracking you.”

Mohrer never asked for permission to track her.

[BuzzFeed]

TIME The Brief

#TheBrief: The Battle for Control of the Internet

Explaining what 'net neutrality' really means to you — and the future of the Internet

President Obama took to the White House YouTube channel Monday to call for broadband internet providers to be regulated as a utility — a move that signals his support for the concept of “net neutrality“.

What’s net neutrality? It’s the idea that Internet service providers (ISPs) like Comcast or Verizon should treat all content equally. It might not sound like an inspirational cause, but the question of who has rights to control the Internet affects almost everyone.

Cable companies are clamoring for the right to give faster speeds to certain clients, while many content providers are in favor of keeping all data on the Internet on equal footing.

Watch #TheBrief to find out what’s at stake.

TIME Innovation

Five Best Ideas of the Day: November 10

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. Food touches everything in our lives. Yet we have no national food policy. That must change.

By Mark Bittman, Michael Pollan, Ricardo Salvador and Olivier De Schutter in the Washington Post

2. Electronic Medical Records should focus more on patient care and less on meeting the needs of insurance companies and billing departments.

By Scott Hensley at National Public Radio

3. Anonymous social media often hosts vicious harassment targeting women and minorities. A new plan to monitor threats online is working for a solution.

By Barbara Herman in International Business Times

4. “You can’t wear a Band-Aid for long, particularly when the wound keeps bleeding.” Two years after Hurricane Sandy, New York is far from stormproof.

By Lilah Raptopoulos in the Guardian

5. China and the U.S. should take aim at a new “grand bargain” to head off tensions and mistrust in their relationship.

By Wei Zongyou in the Diplomat

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

TIME Innovation

Five Best Ideas of the Day: November 4

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. Peer-to-peer sharing of experiences could transform health care.

By Susannah Fox in Iodine

2. A technological and analytical arms race is producing the best athletes in history. Can those advances be applied to education?

By James Surowiecki in the New Yorker

3. In South Bronx, startups are ‘onshoring’ technology jobs and trying to spark a revolution.

By Issie Lapowsky in Wired

4. ‘Sister City’ relationships foster cross-border collaboration and spur economic development.

By Nehemiah Rolle in Next City

5. Colleges and universities should focus on student success beyond graduation.

By Karen Gross and Ivan Figueroa at Inside Higher Ed

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

MONEY General Electric

The Untold Story Behind GE’s Most Lucrative Business

A General Electric Co. employee examines a component for a gas turbine at the company's factory.
Fabrice Dimier—Bloomberg via Getty Images

GE’s services business should be a big story for investors.

The financial media these days has two stories when it comes to General Electric GENERAL ELECTRIC CO. GE 0.5214% the one that says GE is downplaying its banking business and the one that shows how GE is returning to its roots by “making stuff” again.

While both storylines are important to GE investors, a separate transformation taking shape inside the world’s seventh-largest company will steal the spotlight in the years to come. The seeds of GE’s next big breakthrough were planted nearly two decades ago, but they’re just now taking root as manufacturing enters a technology- and data-fueled era.

Read on to learn the untold story of GE’s most lucrative business and discover why it’s so important for shareholders to understand.

The one that (almost) got away

The origin of this story dates back to the early 1990s. Jack Welch, also known as “Neutron Jack,” was GE’s CEO, and he was busy making his mark on corporate America.

Quadrupling GE’s market value in roughly 14 years made Welch a superstar in the eyes of everyone from the media to stockholders. To business students around the country, he was the Michael Jordan of their future profession.

Like Jordan, Welch was a fierce competitor, and his unorthodox, assertive style of management took his team to the top: GE became the largest company in the world.

By the mid-1990s, however, this titan of industry faced a dilemma within GE’s walls.

His success to date had rested on strategies that boosted manufacturing efficiency, heightened competition among his managers, and focused strictly on markets in which GE could steamroll the competition. Each had its pros and cons, but the latter strategy specifically began to show signs of obsolescence in the mid-1990s.

This strategy had become known as the “No. 1 or No. 2″ policy at GE. It meant General Electric aimed to dominate the industries in which it operated, or else it would abandon the cause. Anything less than first or second place in market share was simply unacceptable.

As GE grew in size, this all-or-nothing style of thinking caused some serious problems. First off, the incentives were misaligned for GE’s managers. Its own leaders became hyperfocused on maintaining their market position in a given industry instead of thinking about how to expand into a new one. Expansion would mean growing their addressable market, of course, which could bump GE’s rank down a notch or two.

There was absolutely no incentive to grow outside of the box, per se, even if it made sense from a product or customer perspective. To use an analogy, it’s as if a traditional motorcycle manufacturer refused to enter the growing market for off-road dirt bikes because this would grow the arena in which it competed and would mean relinquishing its “No. 1 or No. 2″ position. While this might sound ridiculous, it was a prime example of how GE’s bureaucracy was creating perverse incentives.

And, in the worst-case scenarios, GE managers were given leeway to define their own markets. When this happened, they would often manipulate (read: shrink) their “industry size” in an attempt to look like they had a dominant market presence. Since GE’s underperformers could be shown the door at any moment, this move was a self-preservation no-brainer. But it was highly counterproductive for the company.

At the end of the day, the overriding focus on being first or second prevented managers from tackling new, promising opportunities in which GE might be the underdog at the outset. And the services business was one of these markets.

A “punch in the nose”

At the time, the business of maintaining and servicing heavy industrial equipment was loaded with entrenched players dispersed across the globe. In fact, GE’s potential competitors in this arena numbered in the thousands. One could compare the scenario to a major car manufacturer trying to nudge its way into an auto maintenance industry overpopulated with established, local mechanics.

Taking a backseat to entrenched players — even if it was in the best interests of GE’s customers — was simply unacceptable. It also seemed like small potatoes for a company of GE’s size.

But here was GE selling hundreds of proprietary products like gas turbines that would inevitably need regular maintenance and upgrades. Services might not have seemed glamorous, but it was an area in which GE had a unique and potentially durable advantage.

By 1995, Welch relented; ironically, it was his middle managers who convinced him that this market was too crucial to be overlooked. Welch did an about-face on his long-standing management mantra, and GE began to aggressively pursue services.

In 2000, Welch recalled how the light bulb went off and why he reversed course on services:

Rather than the increasingly limited market opportunity that had come from this number-one or number-two definition that had once served us so well, we now had our eyes widened to the vast opportunity that lay ahead for our product and service offerings. This simple but very big change, this punch in the nose, and our willingness to see it as “the better idea,” was a major factor in our acceleration to double-digit revenue growth rates in the latter half of the ’90s.

Welch’s refusal to set foot in industries in which he couldn’t dominate would be like Michael Jordan refusing to take some lower-percentage perimeter shots. It might make sense for a short stretch of time, but ultimately it underutilized the company’s talent and limited its ability to attack areas where the competition could be outmaneuvered.

The rise of services

Welch called his realization a “punch in the nose,” but he took it in stride. Within three years time, revenue from GE services reached $10 billion, and Welch was singing its praises in his annual letter to shareholders:

The opportunity for growth in product services is unlimited. We have the ability, using high-technology services, to make our customers’ existing assets (e.g., power plants, locomotives, airplanes, factories, hospital equipment and the like) more productive, and by doing so reduce their capital outlays. This growing capability, much of it information technology-based, will enable us to increase our revenues from product services by more than 30% in 1998 — to $13 billion.

What began as a maintenance-focused exercise was unfolding as a productivity-enhancing opportunity for GE customers. And that has continued behind the scenes for the last 15 years. Welch’s successor, Jeff Immelt, has carried the torch.

Under Immelt’s leadership, GE’s services capabilities have evolved and multiplied. Today, GE can actually diagnose problems in the company’s products in advance of a breakdown. For gas turbines and rail locomotives, it’s like a “check engine” light flashing on in your car, but with a real-time response from one of GE’s engineers connected via the industrial Internet.

The probability that a customer will actually have to visit the repair shop is greatly reduced — a big win for around-the-clock energy, airline, or rail operations.

For GE, it’s also a win. Long-term contractual service agreements deepen GE’s relationship with major clients. They enable engineers to better understand how their products are being used in the field, which can, in turn, influence the design process.

It’s also a highly lucrative business.

I’ve compared the equipment-and-services relationship to a razor-and-blade business model. This means the initial sale of GE equipment (the razor) is often accompanied by an even more profitable service relationship (the blade).

The following chart shows how much more profitable services are for General Electric relative to the operating margins of the company as a whole:

Services as reported in third-quarter 2014. Overall business as of 2013 year-end. Source: GE 10-Q, 10-K.

What’s more, services are growing. Once again, this segment is outpacing the rest of GE’s business, making up ground at a company that was hit hard by the financial crisis:

Source: GE's Services and Industrial Internet Presentation on Oct. 9, 2014 and SEC 10-K filings.
Source: GE’s Services and Industrial Internet Presentation on Oct. 9, 2014 and SEC 10-K filings.

Finally, services are scaling across the business. This means it’s starting to make a significant impact on the revenue and earnings of this massive conglomerate.

For instance, from 2011 to 2013, services accounted for 28% of revenue but 40% of earnings on average. Investors can expect services to be an even larger piece of the revenue and earnings pie going forward due to a huge pipeline of work.

Right now, the most important chart for GE investors is one of its $250 billion order backlog. Look at how GE’s backlog has ballooned and transformed from services-light to services-heavy over the past 13 years:

As of 2000 year-end and third-quarter of 2014. Source: GE's 2000 10-K and 2014 Q3 10-Q filing.
As of 2000 year-end and third-quarter of 2014. Source: GE’s 2000 10-K and 2014 Q3 10-Q filing.

What you need to know about the new GE

For investors, it’s important to recognize GE for what it is today.

It’s no longer a bank. In fact, GE expects to derive only 25% of operating earnings from lending by 2016. Lending, too, will be a services-driven business, with GE providing financial expertise — as well as money — to clients in a variety of industries.

It’s no longer an old-school manufacturer, either. Gone are the days of trying to win based on having the absolute lowest costs in the business.

Today, it’s all about enhancing products through services. How can customers reduce downtime? How can real-time data, robots, and connectivity make machines more efficient? Here’s how Immelt put it in a recent presentation on services and GE’s industrial Internet:

[T]his is the new battlefield. This is the new basis for competition. No matter who you invest in, if you are in the industrial space … this is the game of the future.

After two decades in the making, the future has arrived in the form of high-tech services at GE. Although it has generally flown under the radar in the mainstream financial press, the story of services is one that long-term GE investors simply can’t afford to ignore.

TIME Innovation

Five Best Ideas of the Day: November 3

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. “Ultimately, gender equality is a vital part of humanity’s progress. ” Read the 2014 Gender Gap Report.

By the World Economic Forum

2. Shopping for Water: Markets just might save the American West from its water crisis.

By Peter Culp, Robert Glennon, and Gary Libecap at the Hamilton Project

3. With Ebola in the spotlight, Liberia’s nurses take to the streets to care for the sick crowded out of the overwhelmed health care system.

By Jina Moore at BuzzFeed News

4. Humanitarians are preparing for a future with autonomous weapons, which are unlikely to understand mercy, proportionality or the difference between combatants and civilians.

By Malcolm Lucard in Red Cross Red Crescent

5. Markets in everything: Can letting the rich buy into clinical trials produce cures for rare diseases faster?

By Alexander Masters in Mosaic Science

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

TIME technology

FBI Director Implies Action Against Apple and Google Over Encryption

FBI Director James Comey testifies at a Senate Judiciary Committee hearing on "Oversight of the Federal Bureau of Investigation" on Capitol Hill in Washington
FBI Director James Comey testifies at a Senate Judiciary Committee hearing on "Oversight of the Federal Bureau of Investigation" on Capitol Hill in Washington May 21, 2014. Kevin Lamarque—Reuters

The law enforcement chief made it clear, however, that he was speaking only for his own agency and not others

FBI Director James B. Comey has expressed exasperation at the advanced data encryption technologies that companies like Apple and Google say they will offer their customers, and implied that the government might attempt regulations to ensure a way around them.

“Perhaps it’s time to suggest that the post-Snowden pendulum has swung too far in one direction — in a direction of fear and mistrust,” Comey told the Brookings Institution in a speech Thursday. Comey also spoke of the need for a “regulatory or legislative fix” to hold all communications companies to the same standard, “so that those of us in law enforcement, national security and public safety can continue to do the job you have entrusted us to do, in the way you would want us to.”

But in response to questions from reporters and Brookings experts, the FBI director made it clear that he was only talking on behalf of his own organization and thus could not speak for the NSA or other intelligence agencies, reports the New York Times.

This is not the first time that Comey has spoken out against Apple and Google’s move to give users complete control over data encryption, but the implications of legislative action against these companies is a step forward in government efforts to thwart it.

While Apple and Google have not commented on Comey’s latest remarks, technology companies have previously said that the move toward personal data encryption will not slow down, and will in fact probably be stepped up.

“I’d be fundamentally surprised if anybody takes the foot of the pedal of building encryption into their products,” Facebook’s general counsel Colin Stretch told the Times. He added that encryption was a “key business objective” for technology companies.

TIME Innovation

Five Best Ideas of the Day: October 13

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. Women can’t thrive in a society where anything other than “no” means “maybe.” Consent laws are an important step, but we need a change in culture.

By Amanda Taub in Vox

2. Jokes aside, the palace intrigue behind Kim Jong Un’s mysterious absence could contain valuable intelligence.

By Gordon G. Chang in the Daily Beast

3. As we fight the Ebola outbreak in West Africa, global donor organizations should build a recovery plan for the aftermath.

By the editorial board of the Christian Science Monitor

4. That self-parking feature on your new car might help military vehicles avoid enemy fire.

By Jack Stewart at the BBC

5. The next wave of satellite imaging will redefine public space.

By the editors of New Scientist

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

TIME Data

Will We Have Any Privacy After the Big Data Revolution?

Operations Inside The Facebook Data Center
Operations inside the Facebook data center Bloomberg/Getty Images

Zocalo Public Square is a not-for-profit Ideas Exchange that blends live events and humanities journalism.

Corporations know more about their customer’s lives than ever before. But the information economy doesn't have to leave us exposed

Does the rise of big data mean the downfall of privacy? Mobile technologies now allow companies to map our every physical move, while our online activity is tracked click by click. Throughout 2014, BuzzFeed’s quizzes convinced millions of users to divulge seemingly private responses to a host of deeply personal questions. Although BuzzFeed claimed to mine only the larger trends of aggregate data, identifiable, personalized information could still be passed on to data brokers for a profit.

But the big data revolution also benefits individuals who give up some of their privacy. In January of this year, President Obama formed a Big Data and Privacy Working Group that decided big data was saving lives and saving taxpayer dollars, while also recommending new policies to govern big data practices. How much privacy do we really need? In advance of the Zócalo event “Does Corporate America Know Too Much About You?, we asked experts the following question: How can we best balance the corporate desire for big data and the need for individual privacy?

Corporations need to protect vulnerable data

Last week, the government of Singapore announced an increase in the cost of a toll at Bangunan Sultan Iskandar, the customs point for travelers entering and exiting between Singapore and Malaysia. Motorists, who will have to pay over five times more than they previous paid, are furious. In protest, a group of hackers, known simply as “The Knowns,” have decided to use their skills to hack into and release corporate data on customers. The group released the mobile numbers, identification, and addresses of more than 317,000 customers of Singapore-based karaoke company K Box.

In an era of “hacktivism,” data is necessarily vulnerable. So how do we negotiate between companies’ increasing needs to collect and store our personal digital data, individuals’ privacy and ethical needs, and governments that are often slow to gain an understanding of these needs and how to address changes in this area?

If we borrow from recent work by psychologists and ethicists, we can agree upon a few preliminary guidelines: 1) Before collecting private and personal data, consumers should be informed of what data a company intends to collect, how it will be stored and used, and what precautions are being made to protect their information from data attacks. 2) Consumers should be given the ability to consent and opt-out from collection of personal data. 3) Companies that are collecting and storing personal data should periodically remind their customers about their data storing policies.

Although companies should have the freedom to be innovative in their business models (such as by collecting new types of consumer data), these methods should not compromise the individuals on whom companies ultimately depend.

Sean D. Young is the Director of the UCLA Center for Digital Behavior and a medical school professor in the Department of Family Medicine. He writes and teaches about topics at the intersection of psychology, technologies, medicine, and business, at seanyoungphd.com.

Big data isn’t magic

A big data society seems to be inevitable, and promises much, but privacy (properly understood) must be an important part of any such society. To have both privacy and the benefits of big data, we need to keep four principles in mind:

First, we need to think broadly about privacy as more than just the keeping of a secret, but as the rules that must govern personal information. Privacy rules are information rules. We have rules now protecting trade secrets, financial and medical data, library records, and computer security. We have to accept the inevitability that more rules (legal, social, and technological) will be needed to govern the creation of large data sets and the use of big data analytics.

Second, we need to realize that information does not lose legal protection just because it is held by another person. Most information has always existed in intermediate states. If I tell you (or my lawyer) a secret, it is still a secret; in fact, that’s the definition of a secret, or as we lawyers call it, a confidence. We must ensure that big data sets are held confidentially and in trust for the benefit of the people whose data is contained in them. Confidentiality rules will be essential in any big data future.

Third, we need to realize that big data isn’t magic, and it will not inevitably make our society better. We must insist that any solutions to social problems based on big data actually work. We must also insist that they will produce outputs and outcomes that support human values like privacy, freedom of speech, our right to define our own identities, and political, social, economic, and other forms of equality. In other words, we need to develop some big data ethics as a society.

Finally, it’s important to recognize that privacy and big data aren’t always in tension. Judicious privacy rules can promote social trust and make big data predictions better and fairer for all.

Neil Richards (@neilmrichards) is a Professor of Law at Washington University in St. Louis and an internationally-recognized expert in privacy and information law. His book, Intellectual Privacy, will be published in January 2015 by Oxford University Press.

Corporate research is always an unequal exchange

When asking “how can we best balance” the desires of corporations and the needs of individuals, we need to recognize that there are different “we”s involved here. Executives at Google and Facebook are interested in learning from big data, but they are, naturally, more concerned about their own individual privacy than the privacy of their users.

As a political scientist, I’m interested in what I can learn from moderately sized data such as opinion polls and big data such as voter files. And I naively act as if privacy is not a concern, since I’m not personally snooping through anyone’s particular data.

Survey organizations also profit from individuals’ data: They typically do not pay respondents, but rather rely on people’s goodwill and public-spiritedness to motivate them to participate voluntarily in helping researchers and answering surveys. In that sense, the issue of privacy is just part of the traditional one-way approach to research in which researchers, corporate and otherwise, profit from uncompensated contributions of the public. It is not clear how to balance this unequal exchange.

Andrew Gelman is a professor of statistics and political science at Columbia University. His books include Bayesian Data Analysis and Red State, Blue State, Rich State, Poor State: Why Americans Vote the Way They Do.

This discussion originally appeared on Zócalo Public Square.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

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