""Challenges and
Responsibilities to Innovations,
if the Process is to Continue"
by
Henry B. Schacht
Chairman, Lucent Technologies
There are many issues that could be
addressed under this topic heading - many that industry is grappling with.
Such as:
-
How are we going to afford industrial R&D when our customers
increasingly won't pay.
- What is
the role if any of the central labs; are the great central labs of Lucent (Bell
Labs) and IBM the strong and vital survivors they appear to be or are they
really an anachronism; holdovers from an earlier day and destined to be replaced
by a different formulation.
- Who is
going to do fundamental research as the industry moves more toward near term
product development and away from fundamental inquiry; if we are to rely on
government labs or universities who is going to fund them. - As more and more of
our younger students shy away form science and math who will be our engineers of
tomorrow. As public K-12 decays who
will do the training of those unable to afford private education who are going
to be the lab technicians of the future.
- What are
the consequences of an increasingly technically illiterate population in a
technically driven society.
- For the
US and US based industry what are they challenges of the increasing trend of
non-US technical talent in the technically trained pool. A majority of Bell Lab scientist are non-US passported;
almost all our RF work is done in the UK; more and more of our software
development is done in India; etc.
- How do technically trained practitioners stay current.
And on.
However, I've elected to try to deal
with another more abstract issue that is very much on my mind - it is how is
society going to deal with the consequences of the explosion of technological
knowledge and its applications.
Why should industry be worried about
this? Because industry depends on a
relatively stable and civil society in order to pursue innovation effectively.
And I am increasingly concerned that
we are finding it increasingly difficult to deal with both intended and
unintended consequences driven by the rapid advance of technology and its
applications. Destabilization of
our sense of order and stability would be a major challenge to industry's
ability to sustain innovation.
Here then is my "Thesis."
(Rick [Richard Levin, President of Yale] at least won't be surprised at my
choice of a broader rather than a more narrow interpretation of the challenge
and the topic.)
Thesis
The ongoing revolution in
communication technology is driving even further global interdependence and
removing the remaining buffers of time and space.
This will have an increasingly profound effect on many elements of our
society.
First, to produce technically trained human beings who can pursue all aspects of the continued quest for new technological breakthroughs and applications.
Second and, in my view, more importantly, to produce a cadre of human beings who are technically literate and capable of applying technology but who can and will help deal with the very real societal challenges that are and will be the consequences of the accelerating pace of technological change and application.
Many institutions will do the
former; it's critically important that at least a few do the latter - Yale must
be one of these.
Since most of my recent technical
exposure has been at Bell Labs, I may have a bit of myopia. However, the issue I want to explore is the impact of the
massive and swift changes in communication capacities.
-
Computing Power
-
Transmitting Capacity
Each on its own is powerful; the
combination produces capabilities that we aren't even beginning to understand.
All of you I'm sure are familiar
with Moore's Law - named after one of the co-founders of Intel. He postulated (correctly) that computing power would double
every 5 years while the price halved every year.
To many people's astonishment that has been true for quite some time now
hence more and more knowledge generation and more and more electronic devices in
all of our lives.
Recently people have been 'worried
about the so-called "line size" problem on semi-conductors would bring
an end to this phenomena. It's now
clear that we have found technical breakthroughs that will allow us to continue
to benefit from Moores Law for some time. There
are two competing technologies EDM or Photolithography either of which when
combined with new geometry will solve the problem for some time.
These advances will move us to a billion computing devices on a single
1/4inch square chip. These technologies will be available commercially soon;
almost certainly within 5 years. And
we are already working on molecular transistors which the Bell Labs scientists
estimate will allow 100 billion transistors/chip. We have demonstrated switching capability of a single
transistor already - connecting them is the next riddle to be solved.
This molecular technology will take a bit longer, but it will come.
The first "next steps"
will give us virtually unlimited computing capacity and at zero incremental cost
and soon.
At the same time, we are making
equally astonishing advances in optical fiber technology. We have now demonstrated 1 terabit per second transmission
capability on a single fiber. (For the very few a reminder that a terabit is a
million millions). We put 48 fibers in a single cable; that's 48 terabits per
second. In everyday terminology, it
means the capacity to transmit all the printed material in the world in a matter
of minutes; or, stated another way, we can carry all today's intemet traffic on
one cable and…and technical advances continue.
And this will be available commercially soon - most likely within 5
years.
This means virtually unlimited
ability to transmit information - - and again at zero incremental cost.
So, with these two technical
advances we are moving rapidly to an ability to provide unlimited computing
capacity and unlimited transmitting capacity - - both at zero incremental cost.
And available in the same period of time.
The explosion of the Internet and
electronic devices of all kinds are only early manifestations of these trends.
In reality, we have no idea what we
are going to do with this combination or what it will mean but I believe we can
predict with some accuracy that it will change many, if not most, of our
societal assumptions.
Several thoughts:
It will mean that the pace of change
will accelerate even more rapidly while at the same time visibility will
decline. Managers of all
institutions will be faced with the requirement to make more consequential
decisions more rapidly even as the world becomes more opaque; it will be like
driving a race car faster and faster in an increasingly dense fog!
We are going to lose the remaining
time and space that act as buffers even in today's increasingly interdependent
world. We really are going to be
each other's neighbors - - whether we like it or not. People who now rely on time and space to co-exist will have
to learn to solve their differences and live peacefully together without the
current or proposed buffers.
Human beings who often respond
dysfunctionally to rapid change will have to learn to cope with increasingly
rapid change and to avoid the fear and withdrawal instincts that often accompany
bewildering changes.
The question is how are
societies/individuals going to react to all this.
- some will see this as threatening and will try to withdraw;
- some
will see this as a chance for the have nots to join the ranks of the haves and
will press on.
My own view is that there will be a ferocious internal fight within the US but that globalization and the resultant interdependence is a technology-driven certainty. The debate is going to be how we deal with it. One clear consequence of growing interdependently and instant information everywhere is that differences in standard of living are going to be increasingly apparent; the fact that the disparity is growing is not sustainable in a crowded, interdependent world.
Further, we will have to learn how
to deal with the growing income disparity within our own country even as we have
to learn how to deal with the income disparity between the US and the other
parts of the world.
Let's explore this issue a bit.
We are at a historic point.
The bitter and dangerous debate about the supremacy of competing forms of
societal organization is over. Capitalism
has proven a superior concept; those favoring a communist or socialist concept
have proven to be wrong. People all
over the world are turning to market-driven, private capital systems as the
superior form to create wealth. Clearly,
we saw the propensity of capitalism toward excess in the 1998-2000 period. However, even in this painful adjustment period the issues
are how to better control/regulate this powerful engine of growth and wealth
creation and not should we turn away.
However, the paradox is the
undisputed growth of income disparity in this country during the 10-year period
of 1990-2000, an unprecedented period of good times.
While we have had income disparity historically, the new phenomena is the
growth of the disparity during this remarkable decade period of
unprecedented sustained economic expansion and low unemployment.
Even more startling is the fact that during this 10 year period household
income actually declined for a good bit of our U.S. population; only in later
parts of the decade did we see improvements; much of this has been lost in the
2000-2002 period.
And even more startling - using
slightly different data from this decade of unprecedented expansion - 99% of the
gain in household incomes went to the top 5% of our population.
One only has to read the papers to
understand the episodic evidence of escalation of the compensation of those at
the very top of the financial and multi-national corporation world and the
growing and understandable backlash that is building; it was an issue pre Enron
and now, of course, the debate has sharpened and become more heated.
When you combine the real evidence, the episodic evidence, and the increasing visibility that the information revolution is providing, you not only have the paradox of growing inequality even in the best of times but you have the seeds of social unrest.
1)
A reasonable and equitable sharing of wealth created and retained,
2) A social insurance policy that protected any one person who through illness or bad luck or age might become impoverished,
3)
The availability of a good education for all that would allow mobility
equivalent to ability.
During the decade of sustained
increase in prosperity, each of these elements of the social contract that binds
this large diverse country together were fraying; as we go through this period
of adjustment with public budgets again under pressure the strains are likely to
increase.
We clearly have learned how to
create wealth.
The challenge now is to learn how to
distribute the wealth equitably; by equitably I mean in a way that continues to
recognize and reward the spirit of individual entrepreneurship that drives this
wealth creation while preserving the social contract and restoring a more
reasonable balance between common wealth and individual wealth.
As we pause to catch our breath
after the boom decade and digest the excess of the later stages it's a good time
to visit this issue and try to work "ahead of the problem."
The tolerance of a growing
disproportional sharing of the wealth (or failure to share the wealth equitably)
and the simultaneous fraying of the social contract is ending.
Peace and stability in our own society again is at risk.
We face a growing disenchantment in an increasingly restive middle class,
an increasing frustration in a left-behind lower class and an angry
disenfranchised inner city population increasingly isolated and in their eyes
forgotten. And a historical lack of
mobility for many people as the public K- 1 2 system continues its tragic
decline. A description of a fading
American Dream - and the irony or paradox of this continuing even after a period
of unprecedented economic good times.
The time
of greatest success is often the time of greatest vulnerability; and
The
challenge is to do today that which we will wish tomorrow we would have done
1) Build on the promising models of constructive reform emerging in our public K- 12 system; the key to our continuing ability to offer all of our population a chance to participate in tomorrow's knowledge-based work and share equitably in the wealth created.
2)
Continue our historic dedication to a small public sector but define it
in a way that allows for and provides for those who through illness, misfortune
or age fall through the cracks in the system.
This means continued refinement of the Welfare to Work program as data
becomes available and tackling not postponing our issues in Social Security (not
tough) and Medicare (very tough).
It means refining our medical system to achieve a more appropriate
balance between care and costs.
And it means an appropriate commitment to the infrastructure needs of our
country as old investments age and new requirements appear.
19
3)
A direct attempt to modify our current tax system to distribute more
appropriately the wealth we are creating. And doing it in a timely way that
retains the wealth creating incentives while dampening the excesses at the top
and reversing declines at the bottom.
Do this before popular resentment builds to a point where Draconian
changes are forced through which could well jeopardize the entrepreneurial
energy that drives the wealth creation; the law of unintended consequences is
powerful.
Many of the same issues apply within
the various nations of the world; and ironically the disproportionate
distribution of wealth is greater in the very poor nations; and of course vast
disparities exist between nations.
Interestingly, but unsurprisingly,
the wealth distribution is somewhat more balanced in Germany or Japan than it is
in the U.S. The 10-year stagnation plus the first postwar taste of unemployment
is pushing Japan toward a US system; the recent stagnation in Germany and the
very high structural unemployment is also pushing Germany and other continental
countries toward the U.S. System.
Their challenges will be to move toward a U.S. wealth-generating capacity
without giving up their better distribution of income or the heart of their
social safety net.
The developing countries have a
double problem.
First they have a greater internal distribution problem which has led to
the major move away from authoritarian command and control mechanisms of the
right and left toward more popular rule; second, increasingly they have to deal
with a growing awareness fueled by the information revolution of the very large
disparity within their countries and between the US, Europe, Japan and the rest
of the world.
Globalization, driven by the
technological advances, raises many more issues than the wealth inequality issue
I've discussed (at length)
- a global
monetary system whose regulatory mechanisms are based on 1945 assumptions and no
longer valid.
- long
simmering ethnic, religious and regional tensions no longer contained by
the geopolitics of the cold war nor the buffers of time and space. One
only needs to reflect for a moment about the Mideast; do the participants really
believe that space can be created in this information age, so that each can live
side by side but separate. If not what is the answer - and can it be
achieved before the tactics of despair spread.
-
proliferations of arms (conventional as well as chemical, biological and
nuclear, which can be used to ignite regional conflicts and pose a new threat of
a rogue state.
But the staggering income disparity
within and between countries seems to me to be a precondition to finding
stability and peace in this new world of global interconnectedness.
It looks to me like the required precondition.
Dealing with the issue may not (probably will not) solve all the other
challenges we face; failure to deal with this issue makes dealing successfully
with the other challenges much less likely, if not impossible.
And, finally, a few words about
individuals in this global community.
It seems obvious (and almost trite)
to say that as contemporary society changes at a bewildering and for many a
frightening pace, the stability that individuals seek for balance and
perspective will come from the values that are timeless.
And I believe that communities that
are held together by shared beliefs that also respect and honor other
communities that hold different equally firmly held beliefs will be the bedrock
of this "new" society - - and the places that individuals will turn
for assurance and support.
I do not need to remind those in this hall that the beliefs that have stood the test of time are those that will see individuals through times of turmoil and bewildering change; reminding our technically trained leaders of tomorrow about this truism is a critical responsibility for all who teach in our engineering schools.
In many ways - - the more things
change, the more they remain the same.
So, in summary, the need for the
developed world to deal with their own internal income distribution issues is
paramount for ongoing, internal stability of each of these countries; having
demonstrated the superior ability of the market driven private capital system to
create wealth, we must now demonstrate an equally superior capacity to
distribute equitably the wealth created.
The US will debate turning inward
and away from these issues. I do
not believe this can possibly work. The
global financial system is a reality and increasing global interdependence is
right ahead. Technology will drive
this.
This means the developed world has
the opportunity and responsibility to both work on its own wealth distribution
issues and help the world of many nations do the same.
At the same time, the explosion of
information technology we discussed at the beginning also will bring new and
increased pressure to close the income gap between the developed and the
developing countries. The time and
space that has made these disparities tolerable is disappearing.
The developing world has the added burden of dealing simultaneously with
internal disparities and growing aspirations for self-determination that also
threaten stability.
Narrowing wealth disparities by
itself will not solve the tensions built up over thousands of years that we see
erupting in many parts of the world; nor will it solve the lack of understanding
and trust that will be required to build bridges and create institutions that
bind disparate societies and cultures together.
However, if we truly are going to
have a lasting peace in a technologically driven, globally interdependent world,
we will need to deal with the income distribution issue that underlies, at least
in part, many of the existing tensions and has the potential to create even
more. A better standard is living
for those less well off (and increasingly aware of it) is a necessary
prerequisite for peace. While not
guaranteeing peace, it is a prior requirement.
The opportunity we have comes from the clear and powerful understanding we have achieved about how to create wealth.
The challenge is now to learn how to
distribute this wealth in a way that both preserves the societies' wealth
creation capacity and meets the legitimate needs of all its people.
And to do it in a way applicable not
only to the US but to this shrinking global society that is increasingly
interdependent and is about to lose it's buffering time and space.
Far a field from our topics of this
forum - I don't think so.
This University and others like it
have a choice - it can concentrate on turning out practitioners.
We in industry will be grateful
recipients of your students indeed we are dependent on them if we are going to
continue our pursuit of innovation.
I am confident you and other great
Universities will do this and do it well - and we will solve the more narrow
challenges to innovation I suggested earlier.
However, I believe the greater
challenge is to turn out well educated technically literate humans who can help
drive continued innovation but who also are capable leaders of our societies,
able to lead us in dealing with the intended and unintended or unanticipated
consequences of the accelerating technical revolution.
You may well not agree that income
disparity is a key issue and that the consequences of unlimited computing power
and unlimited transmitting capacity both at zero incremental cost will remove
all the trusted barriers of time and space.
However, the impact of such a major
change on societal understandings and capacities will be pronounced and will
need to be absorbed.
Training our
"graduates-to-be" in both the narrow skills and the capacity to
understand and help solve the societal consequences is, in my view, a task of
first importance.
A challenge to this and other
first-rate institutions.
I'm an optimist. I believe Yale and other similar institutions will rise to
this need and, therefore, will help industry and society deal with the most
significant challenge to innovation.
#
Back to Forum program