Harvard Business School Working Knowledg e Archive

As the future catches you

11/12/2001
We live in a time where a talented individual can become wealthy almost overnight—and lose it all just as quickly. Where companies must constantly transform themselves to remain leaders. And where once formidable countries all but disappear as they fall behind the technology curve. Harvard Business School professor Juan Enriquez says that pace will accelerate even more as the genomics revolution takes hold. Plus: Author Q&A


As the Future Catches You

In this excerpt from As the Future Catches You: How Genomics and Other Forces Are Changing Your Life, Work, Health, and Wealth, author Juan Enriquez says that companies and countries that fail to keep up with the technology revolution will not only fall behind, but likely disappear. The book employs unique typography and other design elements that we have tried to reproduce—with varying degrees of success given the limitations of HTML. As Enriquez says, "Life science is too much fun to put into a dull format."

SLEEPLESS…(AND ANGRY)
IN SEATTLE

Some think that the only people anguishing about
massive economic change are the colorful protesters
who gather dressed as bioengineered vegetables
outside meetings of the World Trade Organization,
the World Bank or the World Economic Forum…

Wrong…

Corporate kahunas are just as concerned and scared about the rate of rapid change.

XII SLEEPLESS

Trade Organization,

The reason so many ...

 

Were sleepless ...

 

Frustrated ...

 

Angry ...

 

In Seattle ...

 

 

 

Was not the World Trade Organization and its policies per se ...

 

It was a general sense that the world is moving too fast ...

 

And there is no way to catch up ...

 

Or have a say . . .

 

That those who are not market-savvy and technology-literate ...

 

Are going to have a hard time even staying in the game.

 

 

 

But just as peoples and

regions are scared of the

multinational behemoths ...

Mega-companies are also terrified ...

That they may not be large enough ...

 

Or fast enough to compete ...and survive.

 

 

 

 

(In the late 1970s, Xerox was the tech company, and the FTC was suing it for

antitrust . . . It birthed the computer mouse, the point-and-click graphics on

your screen, the way to network the Internet ...But it allowed Apple,

Microsoft, Hewlett-Packard, and 3Com to walk away with these busi-nesses

. . . Two years ago Xerox stock was trading at $65 per share ...By

the end of 2000, it was around $5 . . . and there were rumors of major

restructuring . . . if not bankruptcy.)

 

 

Look at the choices faced by pharmaceutical companies, for instance ...

Creating a new drug ...

May cost $500,000,000 ...

And take over a decade ...

 

With bets this size, you can lose a third or half the value of your com-pany

...overnight ...if you make a mistake.

 

 

The genomics revolution could potentially lead to ...

Anywhere between 4,000 and 10,000 new medicines ...

Which could require that the pharmaceutical industry spend over ...

$2,000,000,000,000 on R&D ...

A sum close to what every person in Latin America produces

in one year ...

So it is no wonder that pharmaceutical companies

are merging madly . . .

To try to stay on top of the genetics revolution.

 

But even if large

companies ...Grow ...Merge ...Dominate ...

 

They still find it hard to monopolize, or even attract, the best brains.

 

(In 1984, the largest U.S. software company was Wordstar

International.)

Some do not need a lot of resources ...or a lot of time ...or

people ...to get very rich.

Small companies can generate a great deal of wealth ...and get very

large ...very quickly . . . with ever fewer employees.

 

 

HIGH TECH ...AND A FEW PEOPLE . . .

POWER THE ECONOMY

[table 1]

 

 

A person like Craig Venter can birth entirely new industrial sectors.

Genomics basically did not exist before 1992 ...

It has generated a few thousand jobs ...

And an economy about half the size of Chile's . . . in five years.

But caveat emptor ...2

Before you go invest Grandma's pension or your kids'

college fund ...

Remember that few of the initial leaders of the computer revolution . . .

Prospered, or even survived.

Just like initial IT stocks, genomics companies are

highly volatile and speculative.

 

A lot of genomic market value disappeared with the

NASDAQ crash ...

 

Despite having completed the full gene sequence of

fruit flies, mice, and humans ...

 

Established a massive computer center ...

And accumulated more gene data than anyone else

on the planet ...

 

Celera was half as valuable in January 2001 as it had

been in 2000.

 

GENOMICS . . . A BUBBLE? . . .

OR A PREVIEW?

 

 

 

In five years, Celera might be Oracle ...or it might be Xerox . . ..

Traditional pharmaceutical companies are terrified ...

By the speed with which a technology ...

And a new industrial sector can became dominant ...

Or crash.

Established companies fear that ...

Genome stocks may simply have overshot their short-term value ...

And may yet generate monster companies that can take over the old

conglomerates.

 

(Just ask the folks at Time Warner about that brash little start-up called AOL.)

 

If new companies ...

And new economic sectors can appear ...

In just a few years ...

Entire economic sectors ...

And dominant companies ...

Can also disappear ...

In a few years.

 

 

Few remember An Wang ...

But through the early 1980s, his machines dominated

corporate America ...

 

Because he built the best word processors around.

 

But the machines never evolved into computers ...

 

Nor did they incorporate spreadsheets ...

 

And Wang went from nearly absolute dominance ...

 

To bankruptcy.

 

This can happen to the very biggest.

 

 

IBM lost its global IT dominance because it did not

 

realize that ...

               

One of its minor contractors had a very powerful idea ...

 

(The contractor was called ...Microsoft.)

               

The box became a commodity ...

               

The value came from the operating system ...

               

And in January 2001, after very painful restructuring ...

               

IBM was worth $195 billion ...

               

While Microsoft, even after its close encounter with justice ...

               

Was worth $325 billion.

 

 

MICROSOFT ITSELF ALMOST FOLLOWED IBM'S PATH ...

IT TOOK BILL GATES A LONG TIME TO FIGURE OUT . . .

THAT THE INTERNET WAS NOT A FAD.

 

 

(Ironically, Microsoft asked the FCC to block the AOL Time Warner merger if

the company refused to open its instant-messaging protocol.)

 

 

That is why Andy Grove, the man who runs Intel ...

 

The largest computer-chip manufacturer in the world ...

 

Understands the power that technology has ...

 

To create and destroy.

 

So even though he is smart and tough as they come ...

 

He chose to title his book . . . Only the Paranoid Survive.

 

(He has destroyed and reinvented his own company several times.)

 

 

The great and established ...are nervous.

 

Imagine walking into the hallowed offices of "the newspaper of

record"...

 

THE NEW YORK TIMES ...

 

You can breathe history, meet relatives of the founders, admire old por-traits...

 

After all, it was founded in 1851 ...

 

A great company, real assets, 13,400 employees, including some of the

world's finest journalists ...

 

Worth $6.8 billion.

 

 

Then wander over to the other coast ...to Santa Clara,

California ...

 

And visit a company founded in 1994, with one-seventh the

employees of the Times Co....

 

Some of whom wear snakeskin boots, tight skirts,

sneakers, and nose rings ...

 

And who are also in the business of providing news

and entertainment ...

 

They built a little company called Yahoo!...

 

That at one point was worth over $100 billion ...

 

Because it had over 120 million users.

 

(Alas ...unlike AOL, Yahoo! did not merge and lost 90 percent of

its market capitalization.)

 

This is happening in business after business ...

 

The digital economy leverages brains fast.

 

Sears Roebuck ...founded 1893 ...326,000 employees ...

is worth less than ...

 

EBay ...founded six years ago ...138 workers ...

$13.3 billion market cap ...post NASDAQ crash.3

 

 

Even if Amazon, eBay, Yahoo!, and other Internet leaders were to

crash ...

Again ...

A revolution still took place ...

The market changed ...

And an Amazon-like company is likely to dominate retail.

 

 

(This phenomenon occurred with the personal-computer revolution.

Bill Gates started programming on an Altair ...

Commodore 64s were popular for a while ...

Apple ruled . . .

The fact that the leaders crashed ...

Did not stop the IT revolution.)

 

 

COUNTRIES . . .BUSINESSES . . .

GOVERNMENTS . . .THAT SEEK TO PROTECT ...TO

MAINTAIN THE STATUS QUO . . .

ARE BOUND TO GET POORER QUICKLY ... AS

TECHNOLOGY FLOURISHES IN OTHER REGIONS.

 

 

 

(IBM's boss: "Today, even in an industry known for speed, the rate of change

is unprecedented, and it's only being accelerated by the Net. It's fun. It's a

challenge. But if you pause, say goodbye.")4

 

 

Meanwhile ...

 

Back at the genome ranches ...

 

Knowledge and databases continue to expand at unprecedented

rates.

 

Even after the

U.S. Patent and Trademark Office

 

revised the rules on gene patents ...

 

Genomics drove around 25,000 new patent

 

requests in 2000 ...

 

25 percent more than in 1999 ...

 

More than all Internet or computer businesses ...

 

Forcing the office to hire 80 new examiners ...

 

Who

 

were

 

        immediately

 

    overwhelmed.

 

 

Regardless of the fate of any particular company or country . . .

 

The revolution is accelerating.

 

 

 

· · · ·

Excerpted with permission from As the Future Catches You: How Genomics and Other Forces Are Changing Your Life, Work, Health, and Wealth, Crown Business, 2001.

[ Order this book ]

Juan Enriquez is a senior research fellow and director of the Harvard Business School Life Science Project.

Juan Enriquez
Juan Enriquez

In an email interview with HBS Working Knowledge editor Sean Silverthorne, Juan Enriquez discusses his new book and the impact of the technology revolution on people, careers, companies, and countries.

Silverthorne: One of your themes is that education and technology will be greater keys than ever before for countries that want to compete globally in this new era. What countries do you believe are best positioned to capitalize on these keys over the next several decades?

Enriquez: Wrong question. Wealth increasingly depends on individuals rather than countries. You do not need to move a farm or a factory to move the equivalent of a county's GNP; you just have to move, or lose, a few brains. Countries that seemed invincible a couple of decades ago, like Japan, can lose competitiveness and momentum almost overnight, because they run out of ideas and entrepreneurs. Meanwhile, isolated mini-states like Luxembourg can generate one third more wealth per person every year than does the U.S. In a knowledge economy, wealth is almost completely mobile, which means who is on top and who is on the bottom can shift very quickly. In 1970 few would have predicted the rise of Singapore or Ireland.

Only countries that constantly recognize and adapt to these trends will do well. Others will continue to ignore education, fail to attract the world's smartest, and make it hard for foreigners to set up new ventures. It will not take long for them to become irrelevant. So far the U.S. is doing the best job, but Singapore and Finland are catching on fast, as are parts of China.

What should leaders of companies take away from reading your book? How can they steer a business effectively given the raw power and speed of new developments that are changing so many fundamental aspects of our lives?

The future of any country or company depends on understanding and applying new knowledge during periods of discontinuity. If you can interpret, transmit, and use more knowledge you tend to win. This is why the balance of power shifted from China, with its 10,000 character-plus alphabet, towards Western Europe where you could say all the same things with twenty-six letters.

Over the past few decades the world's dominant alphabet was based on two symbols, 1s and 0s. Those nations, regions, and companies that went digital tended to do well; those countries that focused mostly on preserving the past could introduce the Minitel, wire the whole country before anyone else… and still miss the boat. That is why Finland dominates wireless rather than France.

What today's leaders have to understand is that we are living another massive information discontinuity. The dominant alphabet is rapidly becoming the language that codes for all lifeforms, DNA/proteins. This is already creating the world's largest data/knowledge sets, and it has started to change large portions of the global economy including chemicals, pharmaceuticals, energy, biotech, food, seeds, and cosmetics.

The traditional idea of a predictable career path has been changing radically over the last twenty years—people are taking new jobs that were not even envisioned a year or two before. How will careers develop from here forward? How can we all prepare for the changes in the job markets?

If you were an ambitious youngster in 1900, and wanted to be at the pinnacle of U.S. business, you would have prepared yourself to run companies involved in things like oil, gas, lead, leather, mail, or coal. Turns out, a few decades later, when you reached the CEO suite it was much more important to be machine-literate. The same is happening today, but in a compressed time scale; Internet mavens are finding that knowing a digital language is not enough. Now they have to also be literate in life script. Bioinformaticians are getting all the top jobs.

As an executive you are going to have to understand concepts and skills that did not exist when you graduated, i.e. genomics, bioinformatics, nanotechnology, and photonics. What you and your company do is likely to change radically every decade. This is why places like Harvard Business School are investing so much time and effort into executive education. All of us have to continuously learn and retool.

What are some of the incredible products and markets that might spring out of the genomics revolution? To take a current example, should we expect to see a company creating drugs or gene treatments to immunize us against anthrax and other bioweapons? Can science save us as well as kill us in this area?

Science empowers countries, companies… and individuals. A place like the Institute for Genomic Research (TIGR) can sequence and annotate the entire gene code of a major disease in weeks. This means we have a good shot at beating malaria, dengue, meningitis, and a host of other pathogens within a decade. The genes of bananas have already been retooled so that the fruit vaccinates those who eat it against cholera.

These labs are on the frontline of genotyping and fighting deliberately engineered diseases like anthrax and other potential bioweapons. This means the U.S., Japan, and Western Europe have a much better chance to survive a smallpox attack than does the developing world, but it also means rogue scientists and groups can potentially do a lot of damage very quickly.

As we acquire direct and deliberate control over the evolution of all life forms, we also acquire an awesome responsibility. Over the next few decades we will greatly increase our ability to generate wealth and to extend our life span and quality of life. We can cure; we can feed; we can also destroy. This is why it is so dangerous to let so many fall so far behind and get so angry. We have to get serious about chemical and biological weapons treaties, and we have to make sure many more benefit from mankind's extraordinary discoveries.

The layout of the book—typography, formatting, and sentence structure—is quite unusual. What was the reason for this format versus a more formal approach?

Many people shy away from science. They think it is too complex or that it is not really relevant to their lives. Many traditional science texts tend to be long, filled with equations, and overly technical. I wanted to create a non-threatening book that anyone can read and understand. The life science revolution is already changing all of our lives and we all have to be a part of the debate. Too much is at stake to hide behind gobbledygook. Also life science is too much fun to put into a dull format.

What is your next big project?

We are launching a Life Science Project at HBS to map who generates and uses raw nucleotide data, that is who uses life script and for what purpose. In the process we are looking at specific companies and tracing how this information flows within these companies. In a sense we are trying to map how companies go from being digital to being genomic.

1. Daniel Hecker, "High Technology Employment: A Broader View," Monthly Labor Review, June 1999.

2. Latin for "Let the buyer beware."

3. Based on Yahoo! Finance, Hoover's Company Capsules, and Excite as well as annual reports for companies. Net income is income available to common stock for trailing twelve months. Data is from February 2001.

4. Lou Gerstner quoted in Technology Review, February 2001. This publication, which describes itself as "MIT's magazine of innovation," is a good way to follow some tech trends.