The Skills Gap: U.S. Requires a New Educational Model for Economic Growth, Says IBM’s Stan Litow

Linking educators and employers is key to economic recovery and maintaining American global competitiveness

by Stanley Litow, IBM Vice President of Corporate Citizenship and Corporate Affairs and president of the IBM International Foundation, in U.S. News and World Report

Author Stanley Litow

Although the latest U.S. employment numbers are trending positively, there remain deep and systemic issues that have made fuller economic recovery elusive. Chief among these is the disconnect between the availability of skilled workers and the tens of thousands of good jobs waiting to be filled. Our understandably intense focus on restoring full employment in the current down-cycle economy has led some to relegate education and education reform to the back burner.

But we do so at our peril. The fact of the matter is that a redesigned and stronger educational system is essential to a sustainable economic recovery. We do ourselves—and future generations—a disservice if we fail to acknowledge this critical relationship.

Teachers and administrators say students are more focused with the shorter week, but critics are skeptical.

Recent statistics from the U.S. Department of Education indicate a significant increase in high school completion rates. That would have been great news had it happened more than 40 years ago, when a high school diploma still was either a ticket to a middle-class lifestyle or meaningful preparation for postsecondary education. In 1970, nearly 75 percent of people with only a high school diploma were middle class. But that’s ancient history in a world where the time between generations shrinks every year. In less than 10 years, fully two thirds of all middle-class jobs will require postsecondary education or training. Workers with only a high school diploma—including the 75 percent of community college students who fail to complete their associate degrees—will have few opportunities to earn more than poverty wages.

According to The College Payoff: Education, Occupations, Lifetime Earnings report by the Georgetown University Center on Education and the Workforce, the United States currently has 29 million middle-class jobs that require at least two years of postsecondary education or training, with an additional 14 million jobs coming online over the next 10 years. These current and future jobs span industries such as healthcare, information technology, business, professional services, and office and sales support. In addition, many of these jobs offer entry to lifetime careers, especially for the 30 percent of community college graduates who go on to complete their bachelor’s degrees.

It is clear that education is firmly linked to economic growth. But simply funding education without reforming it is a mistake. To achieve education performance results that are meaningful in today’s economy, we need to commit to both support and innovation. We need to retool our school systems to enable businesses, educators, and communities to collaborate on strategies that leverage diminishing resources to the greatest advantage for our young people.

Two initiatives that have the potential to maximize educational performance and create solid economic value are career and technical education (CTE) and a new approach to professional apprenticeships. Implementing these programs via deep collaborations across businesses and education systems at all levels could refocus billions of dollars of current funding on innovative solutions to the challenges facing our young people in the 21st century, and offer larger numbers of them a ticket to opportunity.

Today’s CTE programs replace what we used to call vocational education—now an outmoded model. Twenty-first century CTE programs must emphasize public-private partnerships between educators and employers, and ensure that school curricula are academically rigorous and economically relevant. Working together, educators and employers can structure course content and classroom experiences to create a seamless link between education and careers. One such partnership is the collaboration among the New York City Schools, The City University of New York, and IBM on New York’s Pathways in Technology Early College High School (P-TECH), a grade 9-14 school that confers both the high school diploma and an associate degree in technology. Now entering its second year, P-TECH is achieving exciting results that are both replicable and scalable nationwide. The core concepts of this initiative are embodied in the U.S. Department of Education’s Blueprint for Education Reform.

Adopting a new approach to professional apprenticeships enables us to link education to employment in another important way. In Enterprising Pathways: Toward a National Plan of Action for Career and Technical Education coauthors IBM and Opportunity Nation suggest repurposing Federal College Work-Study funds (currently about $1 billion that provides on-campus wages for nearly 1 million college students) to help pay salaries for off-campus jobs that are directly connected to the students’ academic majors and intended careers. Replacing “cafeteria work” with meaningful professional apprenticeships with a built-in funding source, these new-model work-study jobs could be in the public, private, or nonprofit sectors. But these jobs must be designed to build skills, not just provide funds to pay tuition; they can and should do both. The distinguishing characteristics of these jobs would be the opportunities they would offer for college students to learn relevant skills to advance their learning and careers.

Working together to connect education to careers, educators and employers will help millions of our young people prepare for both higher education and meaningful lifelong employment. The United States has a distinguished history of adapting educational requirements to evolving market demands to maintain a competitive and stable economy. America enacted historic initiatives that increased mandatory education from eighth grade to high school, and later enabled broad access to higher education via the GI Bill. Both were education initiatives that fueled unprecedented economic growth. Just as we did in the past, it is now time for us to invest our efforts and resources in new educational models that will grow the skills of our young people and strengthen America’s global competitiveness.


What steps do you think should be taken first?


3 Strategies to Dominate a Still-Scary Economy

Here’s how smart companies are facing the doomsayers with great ideas and fearless moves

By Geoff Colvin, senior editor-at-large, FORTUNE

Gloom has become a menace. The drumbeat of distressing news — Europe, the fiscal cliff, China — is enough to rob anyone of hope. It’s a nasty, insidious force that’s undermining the native optimism that buoys up businesspeople everywhere.

Resist! The reality is that even in today’s uncertain economy, some companies are winning big. Growth and success are always possible if we adapt to the times. Three strategies are helping smart companies dominate.

They manage for value — not for EPS, Ebitda, gross margin, revenue, cash, or anything else. That sounds obvious, but in difficult times, managers get seduced into value-destroying moves. For example, accounting rules say that R&D and marketing are expenses, so if you cut them — and they’re easy to cut — reported profit jumps. Who doesn’t want higher profits now? But in reality those costs are investments that pay off for years, so cutting them destroys value.

A company that understands that is Qualcomm (QCOM), maker of the chips that power mobile phones. In the recession its profits fell in 2008, then fell sharply in 2009 — yet the company increased R&D, sometimes substantially, every year through the downturn and beyond. The complaint that mindlessly short-term-obsessed investors punish such behavior just isn’t valid; Qualcomm’s stock has been surging for more than three years.

Other companies manage for value in other ways. Intel (INTC) launched billions of dollars in new plant construction when its industry was on life support and credit markets were traumatized. Coca-Cola (KO) never let up on brand building. Those companies are thriving.

They keep developing human capital. Every company claims that “people are our most important asset,” but few mean it. In tough times most companies slack off on leadership development. Training costs money, and moving high-potential managers into developmental assignments feels like a luxury that can wait for better times. But the best-performing companies know that human capital truly is a business’s most valuable asset, the scarcest resource, no matter what kind of business it is. Look at highflying IBM (IBM), No. 1 in our latest ranking of the world’s top companies for leadership development. It hasn’t even considered cutting back its Corporate Service Corps, which sends teams of promising employees around the world to work with local organizations on local problems. Former CEO Sam Palmisano liked to observe that calling IBM a hardware or software or services company was wrong in each case. “We’re a people company,” he said. Or consider General Mills (GIS), prospering in the fiercely competitive food industry. Its famously demanding leadership culture hasn’t wavered, and the company ranks No. 21 on’s new list of the 25 companies where it’s hardest to get hired.

They get radically customer-centric. Most companies don’t even know what that means. They have no idea how much money they make or lose with each customer, and they don’t craft genuinely different offers for different customers or customer segments based on those customers’ needs. But top-performing companies do.

Amazon (AMZN) is the reigning champ, achieving its long-declared goal of being “Earth’s most customer-centric company”; the stock just keeps climbing. In a much different industry, Wells Fargo (WFC) has become America’s most valuable bank, with a customer-centric strategy since 2003. Wharton professor Peter Fader notes that “the average Wells Fargo household has over five different bank products, roughly twice the industry average.”

These three strategies are a bit contrarian in today’s world. Following them demands courage. Fear not. They work. Be brave, adopt them with enthusiasm, march confidently into the gloom, and smile.


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SMARTER: The Next Great Opportunity

DkistockeyesmI see it clearly. Vision. Courage. Always thinking an idea ahead. This was one of the first lessons I learned at IBM many years ago. It was taught to us, refined, honed, renewed, revitalized and called upon through periods of change, big and small — a second-nature for an IBMer. This is how I recall it. Do you?

As the current economic crisis began to unfold in October 2008, I wrote about this quality of "thinking an idea ahead" in a blog post, ECONOMY: The Next Great Opportunity-WHAT TO DO, telling the story of being introduced to the concept at "new employee orientation" at IBM. I told how this quality saved my business some years back and shared "what you can do" ideas. What I remember most about the story that has inspired me all these years was that thinking an idea ahead prepares you to be ready for that next great opportunity.

Last week, Sam Palmisano, IBM’s Chairman and Chief Executive Officer, took this deeply rooted quality of thinking an idea ahead to a whole new level for the twenty-first century, when he invited all of us and the entire world, into a new bold vision of "A SMARTER PLANET: The Next Leadership Agenda" in his address to the Council on Foreign Relations in NYC on November 6. "…a period of discontinuity is, for those with courage and vision, a period of opportunity."

He defined current realities for leaders: "Our political leaders aren’t the only ones who’ve been handed a mandate for change. Leaders of businesses and institutions everywhere confront a unique opportunity to transform the way the world works."

He painted a vivid picture of a SMARTER PLANET: One that instrumented, interconnected and intelligent with abundantly available, low cost technology solving our most pressing problems around the world. The inspiring examples prove that the time for change has truly come!

He called for new leadership qualities: "There is much serious work ahead of us, as leaders and as citizens," he told us. "Together, we have to consciously infuse intelligence into our decision-making and management systems…not just infuse our processes with more speed and capacity. I believe  we will see new leaders emerge who win not by surviving the storm, but by changing the game."

As I wrote in my book, Putting Our Differences to Work: The Fastest Way to Innovation, Leadership, and High Performance, the word leader has a Germanic origin meaning to "find a new path. There is a constant stream of achievements rising up from individuals and organizations across the world finding the new paths we need. Our part is recognizing that we have to fundamentally change the way each one of us think, behave, and operate as leaders and innovators to reap the benefits of the globally integrated, interconnected world. The next great opportunity is ours to own.

Are you ready?
I am. I want to be one of those leaders. I want to one who helps change the game, don’t you?

Ignite your passions, watch these SMARTER PLANET videos on YouTube:

Proudly BLUE,


Dkdesk1008Debbe Kennedy
Contributing Author
Greater IBM Connection
Founder, President & CEO
Global Dialogue Center and
Leadership Solutions Companies

author, Putting Our Differences to Work

IBMer 1970 – 1991 L.A.; Anchorage; Seattle; San Francisco

Is that my crunchie?

This mornings radio had it’s usual series of bad news from around the world, including the credit crunch and the political fate of more than one national leader, but one thing struck me was that we (humans) seem to inflict these upon ourselves or our own with what seems like growing regularity.

For instance, take the green issue.. well the wonders of bio-fuel are as you probably know pushing up the price of our shopping (especially bread, cereal and anything that eats grain) and for some people making it impossible to afford the basics.  Huge areas of the planet are now growing food quality wheat to put in cars.  Riots in Asia have broken out because the cost of rice is rising well above what people can afford.

Personally, having to pay a few pence more for a loaf of bread is nothing but annoying for me.  However, for a huge slice of humanity it is life or death.  Instead of finding really clean, green ways to transport our ever growing backsides around the planet we are looking at an alternative which may have real consequences for the most vulnerable.

We, as a species, need to get smarter and find truly sustainable ways of developing the economy.  The solutions may not always be simple but the guiding principles should be, starting with respecting each other and helping the most at risk.  If our most vulnerable see those in control having very little regard for them, is it surprising that anti-social behavior which blights many towns in the UK continues to rise. 

The local elections will take place in the UK early next month and in this democracy the majority will not be voting.

Karl Roche