Can We Afford To Fall Behind In Technology??
From 1995 until 2000, the world experienced an unprecedented amount of raw creativity and technological innovation, lead by the United States and its global leadership in information technology (IT). There was a sense that the world was changing and if you missed this window of opportunity, you would never see it again in your lifetime.
Everyone started thinking of new ways to apply technology. They were being told that the Internet changes everything and based on the increasing number of new millionaires and billionaires, they were certain that this was true and didn’t want to be left out.
Executives left high paying jobs to start their own companies, college students dropped out to start their own companies, even high school students started companies. People working for an “old economy” company left to start a “new economy” company. People working for a new economy company left to start an even newer one. The biggest problems organizations faced were the rapid pace of technological change and attracting and retaining talent.
Change Changed
As 2002 drew to a close, interest in new technology was at a decade low, and the United States had never been closer to falling behind as a leader in IT technology.
Ever since the dot com bubble burst and the economy turned south, businesses large and small have changed how they think about new technology. They now see implementing new technology as a luxury they can no longer afford. Many feel there are no new “killer applications” on the horizon, and the focus has shifted to using the technology they already have, cutting costs, downsizing and massive layoffs.
During the past year and for the upcoming year, the majority of IT budgets have been only slightly increased, at best, and many have even seen their budgets frozen or slashed. Attendance at national and international technology conferences has been so low that some had to be cancelled any many are questioning whether to hold one next year. The largest of them all, COMDEX, is a shell of its former self and there is talk that this might have been the last one. Magazines that cover how technology innovations can revolutionize businesses, such as Fast Company, Wired and Business 2.0, have all seen a dramatic drop in subscribers and have adjusted their content to focus less on technology.
The dot com meltdown, the telecom meltdown, the retirement portfolio meltdown, corporate scandals, the threat of more terrorist attacks, and war have provided us with more uncertainty about the future than most of us have ever experienced. The result is a strategic paralysis that could last well into the next year and beyond. Many corporate leaders are hunkered down in a classic crisis management mode. Long-term strategies are out and short-term tactics are in. This is what uncertainty does.
Change or Lose
Until now, the United States has been a clear leader in information technology. Although we do not lead in every technology category, this key area has given us an amazing competitive advantage from a global perspective.
Today, with interest in technology low, budgets tight, and CEOs focused on the next quarter, our IT lead, along with a rising stock market and economic growth, are in jeopardy. In order to reverse this serious trend, we need to identify the poor assumptions that are underlying our behavior.
Don’t let the dot com meltdown fool you into thinking that technological change will diminish as a key driver of increased productivity and economic value creation. The e-business wave of change is in its early stages. Early adopters, such as Dell, Cisco, Wal-mart, Amazon and a host of others, have proven that “e-enabling” the enterprise does pay off in a big way.
E-content management, e-transaction and payment systems, e-supply chain management, e-product configuration engines, e-customer personalization systems, e-enabled call centers and help desks, and e-procurement systems are just a few of the ways technology is revolutionizing organizations. For example, over the next several years, Chevron estimates that it will save over $11 billion using e-procurement systems alone. What if it only saves half of that amount? It’s still big, and that is only e-procurement.
Pick a process and add an “e” and you will most likely have the beginning of an important strategy. The Internet will change everything, but the changes will take more time to be correctly implemented than we once thought. Integrating strategy, technology and people does not happen overnight. Remember the old saying, “The more things change, the more things stay the same.” Human nature has not changed, just as the laws of nature have not changed. Changing how people think and act usually takes more than simply implementing the technology, but it is happening. The payoff is too big to ignore.
R&D Funding
As a nation, our leadership in information technology (IT) as well as many other key areas is in jeopardy. Other nations view our low interest and commitment o new technology and innovation, our dearth of engineering graduates, our low penetration of broadband, and our under-funding of R&D as their window of opportunity to jump ahead.
In the United States today, the amount of money invested in government-funded R&D is less than half of what we spent back in the 1950s! Government-funded R&D not only provides the stimulus for university and corporate spending, it also helps to set national priorities. A recent Fortune article noted that Microsoft outspends the total U.S. Defense Department’s R&D budget by a factor of three.
The result of this lack of commitment is that many U.S. companies (along with many large foreign companies) are moving their R&D efforts from the U.S. to other countries that have set their focus on leading technology innovation in the 21st century – primarily China, where Sony, Sun and GE are already operating large new research labs.
The New China
If you compete on price alone, you probably have your goods manufactured in China. In the late 1980s and early 1990s, many U.S. companies moved their manufacturing plants to Mexico or Central or South America to benefit from cheap labor. As workers south of the U.S. border moved from the farm to the city and began to earn money, their standard of living increased an d eventually so did their wages. Today’s wages are much higher compared to those in many parts of Asia, especially in China, and many of those same U.S. companies that moved to Mexico or further south for cheap labor are now moving their operations to China and Southeast Asia. The economic impact of this shift away from Mexico, Central and South America could be catastrophic to those regions.
What if China had more than just cheap labor? What if it also had cheap knowledge workers? What if it set its goal on becoming the leading technology innovator in the world and addressed it with the same determination as Japan exhibited when it focused on quality manufacturing? What if China was a blend of socialism, communism and capitalism, and it used its dictatorship to make things happen quickly? What if China had more scientists and engineers than the United States? China is currently working at making these “what ifs” a reality.
Engineering Imbalance
Schools in the United States grant about 70,000 undergraduate degrees in electrical engineering a year and 37,000 graduate and doctoral degrees. In contrast, China produces 200,000 electrical engineers and graduates over 600,000 engineers every year!
Fifty-four percent of U.S. engineering doctorates are foreign students. In boom times like the 1990s, that percentage of foreign graduates was not a big problem since many of them found lucrative jobs here in the United States. Now, however, many of the new foreign graduates are taking their higher education and knowledge back home, while many former graduates have been laid off and have already headed back. For example, of the more than 400,000 Chinese who have studies overseas in the past tow decades, over 140,000 have moved back to China.
China is in the process of opening 35 special software universities this year alone. Instead of getting their degrees in U.S. universities, thousands of Taiwanese students are pursuing degrees in China, and they are not the only ones looking at China for advanced degrees.
Broadband Infrastructure
Broadband infrastructure and access provide a key competitive advantage in a networked world because they provide the platform for the development of new and powerful applications of the future. Unfortunately, the United States is falling critically behind in its broadband infrastructure efforts compared to countries such as South Korea, Japan, Singapore, and China.
Could We Lose Our Lead?
In 1983, I predicted that technology would increasingly be the key driver of economic value creation. This prediction has held up for twenty years, and technology will continue to drive growth long into the new century. So, can we afford to fall behind in technology? The answer is clearly no!
Daniel Burrus, one of the world's leading technology forecasters, business strategists, and author of six books
Copyright 2003 Author retains copyright. All Rights Reserved.
