Tech is a many-splendored thing

September 23, 2002

By now, the tribulations of tech have destroyed any appreciation of the innovation hidden below the surface of our economy. There seems to be a creeping (and creepy) enthusiasm for the other shoe to drop. Telecom's woes--large-scale and global--now have sympathetic vibrations in almost every corner of the stock market. Serialized in every sector of our conscious universe, the news about corporate wrongdoing, individual greed and insider shenanigans by analysts and others has further hardened the gloom that has descended on us. Many people anticipate the worst, as if that prospect is still to come.

And what has become of the talk of the New Economy? The pundits that touted it are often now fleeing from their pronouncements. In so doing, they exhibit as much charm as the West Nile virus, and none of its bite. But they also open a schism, between the new and the old, that seems in line with the nostalgia we all feel for older, simpler times. The danger is that we fall back into romanticizing the old, without the perspective of the real benefits of the new, and in so doing, throw out all the babies with their bathwater.

I don't know about you, but I'm tired of the self-conscious drivel that pronounces an inquisitorial pox on all the houses of industry, commerce, invention and entrepreneurship. So, here, from the pleasure of my living room couch, wirelessly connected to the world at large, I decree that it is time to restore some perspective.

This past week, The Economist celebrated the growth of innovation even as the IT revolution seems dead in its tracks. In its excellent Technology Quarterly, the magazine has gone farther than any publication to take stock of the onward march of technology. It also instituted innovation awards to individuals in six areas, who typified the application of knowledge based on scientific discovery and technological progress. For those of us who have long held that the mantra of innovation could only be chanted with feeling, and that the dot com phenomenon was a one-note wonder, not a system of innovation as so many pundits were claiming at the time, The Economist has done us a great service.

The growth of technology and the accompanying rise in prosperity in recent years was only marginally associated with the rising exuberance of the stock market. Ultimately, this growth and ensuing prosperity is spurred by a profound shift in the post-industrial economy, one in which the importance of intangible assets--relationships, knowledge and science-based research has succeeded in pushing the creation of new products and services that have both a positive economic impact and a profound social one. (An excellent and cogent discussion of the importance of these factors can be found in the recently issued report by Ross DeVol and his colleagues at the Milken Institute, State Science and Technology Index). The current issues with corporate governance, greed, lies and miscues, however serious, do not justify a swerve away from these new fundamentals.

Indeed, while we sit back and lick our wounds, countries not hitherto associated with the much-maligned New Economy have recognized the importance of these trends. Take India for example. It has parlayed remarkable technical talent into growing importance as a center of innovation itself. Many Indians are now mindful of the need to move "up the food chain" and thus to become important both to the creation and production of high-value added goods and services. Apart from being an excellent place for call-centers, India has rapidly gained respectability as a business outsource provider, and, concurrently, as the only major developing country to be sited for manufacturing of semiconductors, including next generation ones. If you, as a jaded observer, doubt what economic impact the ongoing tech revolution can have, consider the firmly entrenched upwardly mobile young people in Bangalore, or Hyderabad, or Chennai, the new knowledge workers who have achieved what was considered impossible a mere 10 years ago: rewarding and comfortable careers, good salaries and benefits, a nest egg, homeownership, a thirst for entrepreneurship and an ability to think conceptually, act globally, articulate in the language of our time, English, and be valuable and productive citizens. This has occurred despite the drubbing taken by companies on the stock market, and by the global slowdown in tech spending.

When innovation moves beyond the lab or center of its creation into a commercial sphere, or when it is tied to cycles of production and development, the results are even more significant than the creation itself, in terms both of lasting economic value and of social impact. Consider that corporate research in optical networking, specifically the pushing of the transmission envelope to 40 gbps (also referred to as OC 768) has resulted in a slew of new products by companies like Lucent, Ciena, Quantum Bridge and others, even during this telecom drought. Indeed, the demand for bandwidth has shown little or no slowdown. As The Economist points out, "In terms of the availability of cheap broadband, many consumers are worse off today than they were several years ago." The relentless bottom line (increasing revenue for carriers from the most important part of their business, data traffic) makes for good business even when detractors abound.

Consider also that wireless communications, despite the ballyhooed attempts by scores of startups in the period from 1998-2000, has ushered in a booming market in home networking. The bad story, which conventional analysts are focused on, is that many companies overstated demand, understated difficulty, ended up paying too much for licenses to the spectrum, and were left holding the bill when their value depreciated quickly. The ones who scratch under the surface will find a more profound truth. Wireless is not just here to stay, it has become incorporated in almost all that we do with communications, whether it is person to person, or machine to machine, or otherwise.

Wireless has also led to the adoption of ultra wideband, the latter to be incorporated in electronics products in order to facilitate the sharing of video and digital files within seconds. Here is the New Economy at work: the only losers in this ongoing march of peer-to-peer communication are the media companies themselves, who have to get ahead of the unregulated regimes of consumer behavior and adopt creative strategies to provide the value for which they seek compensation. Self-directed end users will continue to demand and dominate the movement towards simpler data transfer platforms. The threat by media companies that music simply won't be available because artists will not play by the new, currently illegal rules of the game is simply a death cry by the fallen or a cry for help by the clueless. Savvy is as savvy does. New DRM products allow greater flexibility in the packaging and dissemination of copyrighted material, thus meeting the demand by end users for self-directed choice rather than pre-packaged content.

Consider further the astonishing growth of bioinformatics, the convergence of pharmaceuticals, medical devices, computing, silicon and communications. This is not some imagined future. The need for this has never been greater, its benefits never more transparent. A direct consequence of the accelerated mapping of the humane genome, and the growing understanding of complex pathogens and diseases inside the body, the market for developing precision drugs that can then be delivered in precisely the strength at precisely the area required, then communicating the results continually opens up massive new vistas in patient care, disease management, drug discovery and treatment. No wonder that during the lull in tech, biosciences investments have dramatically increased, with every area, including medical devices, being beneficiaries of the growth in the sector. Is it a "shining," especially lucky, economic sector? That's the way conventional wisdom would have you look at it. In fact, it is the byproduct, sometimes jagged, sometimes predictable, of the march of technology; each successive advance leading to the development of new relationships, a new explosion of sharing and processing of knowledge and information, a new set of challenges and activities to pursue.

And then there's the business about nanotechnology. Despite great hype to the point of driving it beyond the comprehension of most folks, the promise of this extraordinary area of research and development cuts across sectors to the point where boundaries between them (IT, life sciences, manufacturing) become meaningless. At its most fantastic, it revolutionizes the creation of new products, their properties go beyond anything conventionally known, and despite long time horizons for its ultimate promise to be fulfilled, its incremental contributions are significant enough to enable new products to meet new needs, fill unmet ones, and create new ones in its wake. This month, the jeans manufacturer Lee has been running ads for its Performance Jean, which shrugs off stains like so much fluff. The material, developed at the molecular level at which a greater level of control over its properties can be established, is what we would refer to as "cool, dude." In reality, it is supercool, dudes.

I don't know about you. But I'm glad to be riding this wave of innovation and advancement. I'm not going to bemoan the diminution of my investment account, because I know that the business cycle will continue, while innovation proceeds apace.

And if I have to do it from the comfort of my living room, device in hand, while being monitored for new deadly pathogens from the West Nile pundits, at least I can communicate with a bunch of people wirelessly, seamlessly, glass of wine in hand, with nary a care about the stain on my new jeans. Technology, you see, is all about becoming the perfect couch potato.

By Rohit Shukla, Larta President and CEO