Strategy; Research: Knowledge as the advantage

TRIMILLENNIUM MANAGEMENT: RESEARCH
Knowledge as the advantage

By Ashok Ganguly

Ashok Ganguly, CEO, Technology Network The economic evolution in developed countries was, for most part of the previous century, marked by a significant shift of labour from agriculture to manufacturing. But, towards the end of the 20th Century, these countries began to usher in a new phase of economic evolution, triggered by the rise of the services industries, and driven by the new knowledge revolution. Countries under foreign dominance did not enjoy the fruits of the industrial (manufacturing) revolution; India was no exception. However, the emergence of the New Knowledge Era provides unique opportunities to developing countries. India can be a key player in the Knowledge Economy in this millennium provided it seeks world-class performance in knowledge-driven industries.

The fundamental changes in R&D and technology which will dominate at least the first half of this millennium are already visible. R&D in 2 key areas of technology marks the flagstones of the revolution. These 2 technologies are infotech and gene technology. No industry, agricultural activity, or service will survive and thrive competitively without the help of either, or both these technologies. This Knowledge Revolution differs from the Industrial Revolution.

The Industrial Revolution was labour- and capital-intensive; the Knowledge Revolution is education- and human-intelligence intensive. Countries and corporates, which are able to master the skills and competencies required to bring about this paradigm shift to create intellectual capital, will dominate trade and commerce in this millennium. The shift to knowledge-based industries and services is already visible in the US, Europe, and Japan. Now, it will spread rapidly across the rest of the world.

The changes triggered off by the advances in gene technology will be most visible in the pharmaceuticals industry. The empirical nature of new drug discovery has become progressively more complex and expensive. The high costs and risk of pharmaceutical R&D have already led to a spate of M&As among the big players. This is expected to make the complexity and cost of R&D in pharmaceuticals more manageable. The traditional method of drug-discovery is also being helped by infotech-driven techniques.

Forecasts say that, in the first decade of this millennium, almost 80 per cent of the global pharmaceutical businesses will be dominated by no more than 8 or 10 corporations. The other force which will drive the move towards this consolidation is progress in the human genome project. The knowledge-driven nature of drug discovery based on the information from the human genome project has already begun to demonstrate the predictability and cost-benefits that are likely to be several-fold superior in magnitude when compared to empirical drug-discovery. Thus, partnerships between pharmaceutical companies and gene R&D boutiques are growing rapidly in the US, and will be replicated in other parts of the world.

There are 2 indicators of which Indian companies will survive in this millennium. Investment in R&D is one. In a supply-dominated environment, investment in R&D was rarely used as a tool by companies seeking a competitive advantage in India. Instead, the key drivers then were technology imports, partnerships with foreign companies, and reverse-engineering. Some of these activities were erroneously classified as R&D. Now, more and more companies have begun investing in genuine business- and market-relevant R&D. But the rate and quality of investments in industrial R&D is still poor.

What role do governments and universities have to play in this process? Let us consider the role of the government first. Irrespective of which country one is speaking about, governments are most comfortable when it comes to controlling labour and capital, but a little overwhelmed by the complexity of issues arising from the knowledge revolution and the growing importance of intellectual capital in wealth-creation.

The Government of India too is threatened by the distributive nature, the complexity, and self-empowering character of the knowledge paradigm. We are witness to the government's attempts to usurp regulatory powers even in the new and emerging areas such as infotech. But, due to the very nature of these industries, the ability of regulators and politicians to interfere in them is restricted. It is because of the borderless quality of knowledge enterprises that India's historic preoccupation with control and restrictions has had only a limited impact on the proliferation of new enterprises and the spread of Indian knowledge-workers across the world.

India's universities and research institutions represent one of the world's biggest repositories for nurturing and producing the human resources required in the knowledge era. This will continue to be, India's biggest asset in its search for leadership in the Knowledge Economy this millennium. Besides generating an annual stream of world-class human resources, several Indian universities and research institutions function as important knowledge-generating centres. Because of the rapid advances in infotech and e-Commerce, it is now possible to assemble, dis-assemble, and re-assemble task-specific knowledge networks linking appropriate institutions with individual firms, wherever in the world they may be located.

The other contribution of India's academic asset-base is that it is the prime source of knowledge workers for knowledge enterprises around the world. Although India, as a country, does not have a brand image in the world of infotech, an Indian as a knowledge-worker is already a highly-regarded global brand. There is a new world-class industry in network-generation and exploitation waiting to be born in India. The most exciting prospect is India's as-yet untapped wealth of institutions of higher learning and research. These will generate intellectual and economic capital at an unprecedented rate.

If the Government of India wishes to enhance the process of knowledge-driven economic development, it should concentrate its energies on promoting the massification of primary and secondary education. It will be in the knowledge industry's interest to be the prime source of funding for higher education and research in the country. It is well within the realm of reality to create a grand alliance between the government, academia, and industry, and, thus, transform India into a key global player, and an economic power in the New Age Of Knowledge.

Ashok Ganguly is the CEO of Technology Network

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