The Irish Times newspaper published a supplement about the top 1,000 Irish companies recently. In it I found an article written by Michael Casey, former chief economist at the Central Bank of Ireland. One of the points in Casey’s article was: It is entrepreneurs who run the economy. I began to think about various aspects of this argument, and how one could define what an entrepreneur is in Ireland, in 2010.

In the 1980s, Apple computer corporation hired a new CEO named John Sculley. Sculley had worked for Pepsi beforehand and approached management from the point of view of marketing. Steve Jobs initially got along very well with Mr. Sculley, but in the end, Jobs found himself ejected from the company he had personal founded. Jobs found himself on the outside, with one hundred million dollars from the buyout of his shareholding in Apple. Later in the 1990s, Steve Jobs returned to Apple computer corporation. It was rumoured around the Apple campus at that time, if you happened to share a lift journey with Jobs, he would only ask only one question. Did you work for the engineering or the marketing department? People who answere the wrong way, found themselves unemployed by the end of the lift journey. Word got around the company. Very soon, no one at all in Apple worked for the marketing department - everyone was an engineer - at least, for the duration of elevator journeys. It reminds me of a statement by a Dublin taxi driver, who are the fountains of all knowledge and understanding about the universe. No one lives in Crumlin. People come from Walkinstown, Kimmage, Templeogue or Terenure. But no one lives in Crumlin. Not even the Crumlin children’s hospital is in Crumlin.

I am trying to make a point of relevance about Ireland and the ’smart’ economy in 2010. Today in Ireland, we want everyone to become an engineer, an innovator, an entrepreneur of some sorts. It is a bit ironic really. Ireland is trying to emerge from the Celtic Tiger era (which was like a huge marketing deception), and managed to over-compensate in the opposite direction. The Irish became world class in the 2000s in selling goods to one another. Holidays, furniture, herbal medicines and gracious living. People who saw the world from a marketing point of view, often held positions of authority. The Celtic Tiger in Ireland, was very much a vendor’s market. I was involved in design and construction of homes and other building types. When the architects and engineers at Zoe developments would argue about some aspect of design or construction, Liam Carroll would always ask the question: Will it add or subtract anything to the sales prices. Arguments were settled very quickly in that manner.

In the book, DEC Is Dead, Long Live DEC: The Lasting Legacy of Digital Equipment Corporation, author Edgar H. Schein remembers one occasion where he had a meeting with the Digital CEO and founder Ken Olsen. Schein tells of when IBM introduced their personal computer product. Ken Olsen, the CEO of a major multinational corporation was in his office and had a screwdriver which he used to break apart the IBM personal computer. Olsen commented to Schein: Look at this thing! If any of my engineers built a computer like this, I would have them fired. Schein suggested back, it didn’t matter how poor the engineering was, if the marketing was first rate. Schein’s job at DEC was to offer his opinions of how the company could improve. Schein’s suggestion was that DEC should develop a really top class marketing department for its product range. Olsen retorted back: You have to understand, this is DEC. We will never have good marketing here. Digital Equipment Corporation was always a company for engineers, run by engineers.

Michael Casey offers some other arguments in his Irish Times article, about the unwillingness of Irish companies to hand over to professional management. Casey also referred to all sorts of inefficiencies in how we do business in Ireland. I attended Bolton Street Institute of Technology during the 1990s and early 2000s. All of the disciplines related to construction and planning resided in that institution.But just because you ‘house’ disciplines in the same facilities, it does not guarantee interaction or communication. Zoe developments was not considered the greatest company that Ireland produced in the past couple of decades. But it was the one place I can recall, where I had an opportunity to meet and chat with individuals from the other disciplines. We all got to meet each other while on company outings to do things like go-carting, paint-ball or five-aside team football. We could begin to consider how to share knowledge and different points of view. We believed in the creation of a much good product delivered to the market at the right price level. There is a lot of potential in the approach, if one cares to develop it. BOH.

Furthermore, immigration and HR labour laws are other meso-level factors that will need to be tackled in an endevour to move to a (tangible, outcome based) smart/knowledge economy…..take it or leave it.

I can’t resist leaving you with this nice quote I came across when doing some research for the Realworldtech discussion lately. From one of Hal Licino’s pieces at hubpages.

“It’s 2007! 40 years after the first Apple! I should be “thinking” and having the words appear on my holographic screen by now! But no. I have to go to spend several more hours clicking OK. Restart. OK. Restart. OK…”

I think the ’smart’ economy initiative will eventually congeal around solutions to problems described by Hal Licino. It is not going to change society, but it might make your system boot a bit faster, and begin to accept you as a presence. BOH.

http://hubpages.com/hub/5_Hrs_26_Min_Is_Too_Long_To_Reinstall_Windows

Good points about education and its value as an export.

@ Derek,

I agree, Trinity is a strong brand and is there to be made use of each generation. It is something that constantly renews and re-invents itself. A very rare and valuable thing in a brand. BOH.

What you said is worrying. If you recall recently at the Infiniti Conference, there was an interesting discussion about the importance of Brand-Trinity.

About a decade-and-a-half ago in the UK, ICI a FTSE-100 company employed a firm of specialist consultants to “revalue their Intangible Assets” i.e. Goodwill. It was revalued upwards from GBP 400 million to about GBP 900 million if my memory serves me right.

What is TCD brand (which ranks internationally up there alongside Ox-Bridge) worth today?

Certainly in the hundreds of million euros.

Politcians take note: we have an undervalued asset in centre of nation’s capitol with the ability to create jobs & promote Ireland internationally, suffering from a Chicken n’ Egg constraint scenario.

I take your point about our failure to create National Champions. Perhaps we could in the Agri-Business or food processing sectors. With more than 90% of Irish FDI from US Multinationals, we have failed to capitalise on indigenous supplier industries (with a few notable exceptions). Instead we make their workers sandwiches!

With regard to the level of post-graduate discipline switching or worse the “Brain-Drain” you refer to, surely that is a function of lack of proper opportunities here, which is why we need to target specific research activities & if necessary provide some level of Government subsidies (to be matched with Corporate investment).

For example, in 1973 when Ireland joined the EEC, many farmers sent their sons & daughters to Agricultural Colleges. Farming techniques & yields increased sharply thereafter, thanks to the certainty of EU money, quotas & intervention prices. However, today the Agrarian sector employs slightly more than 100,000 people - a far cry from a couple of decades ago when the numbers exceeded 400,000. There is no longer any linkage between farm-incomes & land-values, even despite lower Ag-Land values. According to IFA/Irish Farmers Journal, typical farm incomes are just EUR 170 per acre. Yet the UN is forecasting global population growth from 6.7 billion people to 9 billion by 2050, so world food production will need to rise by at least 50%. At the same time we have recent EU accession countries like Bulgaria & Romania with severely underdeveloped Agricultural sectors, hampered by fractional land ownership - a throwback from the Communist era. We in Ireland have the people. Wannabe accession countries like the Ukraine export 19 million tonnes of Wheat per year, despite average crop yields of 1.7 tonnes per Ha. Ask a Carlow or Kilkenny wheat farmer what yields they’re getting and they’ll tell you about twice that per Acre not Hectare! We need to export people Services to these countries, ideally through Joint Ventures, linking up with co-operatives there to work the land alongside Irish farm managers. Then have the likes of a Glanbia in-situ to process the output.

This is analgous to your Nokia example with operations in China, alongside a network of indigenous domestic suppliers & start-ups. The Fins do it with Phones, the Irish could do it with Food.

A May 2010 report by Enterprise Ireland showed that international students are generating almost €430m for the Irish economy annually.

Irish education exports do not even merit a separate category in service exports’ detail, while education is Australia’s third biggest export earner.

The Irish Government has not viewed it as important and has damaged the product by allowing private business concerns from significant operations to small training course providers, to engage in misleading promotion to attract foreign students directly or via overseas commission agents.

Two years ago, the Indian government banned a trade mission by Irish education groups because there was no protection for fees paid, which was highlighted by the collapse of a business called ‘Dundalk School of Business.’

A training course provider, operating over a shop and charging annual fees of €5,000, can be listed with the recognised universities, in Department of Education and Science literature to lure foreign students.

Just an illustration of the need for fresh thinking on new opportunities is provided by data released on the pharmaceutical industry earlier today.

More than $65bn was invested in R&D last year in the US alone but the number of new drugs launched annually has fallen 44 per cent since 1997.

Less than 1 in 10 drugs reaching ‘first toxicity dose’ can now expect to be successfully launched.  

Employment in the 14 Big Pharma companies across the United States, Europe and Japan to fall around 20 per cent or 200,000 between 2009 and 2015.

More than 50% of Ireland’s merchandise exports are from the pharmaceutical and medical devices sectors.

http://www.finfacts.ie/irishfinancenews/article_1020022.shtml

I suspect that if universities were allowed to recruit people on a contract linked to ringfenced funding that would arrive from it they could massively expand exports of educational services. I know in my area we could. theres a massive demand for CFA/ACCA/PRIMA linked masters courses. But we cant hire, even for self financing courses, so we cant export. Dumb decisions dont get smart economies

I’m looking at a PDF document I must have downloaded at some stage, which has an Irish Economy blog site member on the cover. I had a quick search but I cannot find the original IE blog entry, where the paper was linked from. Perhaps someone else knows it? BOH.

Institute for International Integration Studies
IIIS Discussion Paper
No.298 / September 2009
Power and Plenty in 2030
Kevin H. O’Rourke
Department of Economics and IIIS
Trinity College Dublin
Prepared for the session on “The World in 2030. Educated
guesses from a long-run perspective”, 15th World Economic
History Congress, Utrecht, August 2009.

but our 4th-level sector has not expanded, at least since 2007, when as a nation we were spending just 1.25% of GDP on R&D, unlike the Scandinavian countries like Finland or Sweden who typically spend between 3.5% to 4% of their GDP on primary research and development.

Ireland’s international tradable goods and services sectors are overwhelmingly dominated by foreign firms while Scandinavian countries like Finland or Sweden have some of Europe’s biggest companies in their sectors.

For example, at the end of 2008, Finland led Nokia’s country jobs at 23,320 from a total of 125,829. The firm had almost doubled its total payroll since 2006 through expansion in China and India but the home country remains the key part of its operation. Some 300 Finnish companies are direct first-tier suppliers to Nokia and a big proportion of the Finnish employees, work in research and development.

Finland has more than 200 companies with operations in China. 6% of Irish exports to China are made by indigenous firms.

So caution is required when the 3% of R&D target is used for Ireland.

UCC economist Dr Declan Jordan wrote in The Irish Times in July 2009 that: “A census of post-doctoral researchers that left Science Foundation Ireland-funded projects in 2007 found that 9 per cent went to work in science and engineering businesses. A further 10 per cent went to work in industry in other sectors. The most common destination, at 38 per cent, for these post-doctoral researchers was another post-doctoral position on a different research project.”

He added: “It is worrying, given the significant taxpayer investment, that there is so little movement of researchers from funded projects into business.

The most effective method of knowledge transfer from universities to businesses is on two legs,” he said.

We could end up producing PhDs for other markets.

Just to give an example of the challenge of converting research into significant job numbers, consider one of Europe’ top universities ETH Zurich (Eidgenössische Technische Hochschule Zürich/ Swiss Federal Institute of Technology Zurich), in the 10 years to 2007, it had about 100 surviving spin-outs with less than 1,000 jobs.

Agree, it’s a two-way street.

Irish companies spend an inordinate amount of time (& money) on CSR programmes. Perhaps if they spent 50% of this, fostering better links with Universities, we’d have better outcomes.

I guess it’s Carrot n’ Stick, but where’s the incentive for Corporate Sector - this is where Govt policy has to change

There has been a lot of mystery about where this ’smart’ economy bluff came out of all of a sudden. But I can think of one very simple to rationalise this. For a long, long time now we have been busy wiring up the world and selling all kinds of technologies. Many of those technologies speak different languages and have different communities which support them. There are problems of security and complexity to deal with, as we try to merge disparate kinds of information systems together. You have to look at it from that point of view. We have a world today, which was almost entirely designed by the engineer. Which leads to some very, very odd kinds of situations in real, everyday life. Where the systems simply do not know how to accomodate the human being into the equation. I guess the smart economy is about find different ways that people in different situations can plug in systems and interface with them. The smart economy is about making systems more aware of the presence of the user.

If one wants to find any kind of economic rationalisation for this, look at the cost of ownership of systems by public organisations and private entreprise for the last few decades. The utilitisation of the systems and hardware is very, very poor in some cases. Then there is the fact, the engineers who have spent life times designing the infrastructure had almost no training in social sciences at all. There is an amusing podcast at ‘NerdTV’ on PBS website, where Bob Cringely interviewed a fellow called Bob Kahn. Kahn used to keep all of the IP addresses for the early Internet, in his back pocket at one stage. When that got to be too much work, his pocket wasn’t big enough anymore he gave the responsibility to another individual. Of course now, the IP addresses number in the millions. But those early architects of the system did not envision the technology ever becoming what it did.

Nick Carr’s blog, Roughtype, has one entry he called Atmospherics, in which he provides links to some of the best speakers on new cloud-based computing models. Also, if you like, some good folks I have discussed these matters with for 10 years now or so, have contributed responses at Realworldtech. I can understand why Chris Horn for instance is at the centre of the government’s policy making process, for the new smart economy. But I think, we could greatly restrict our parameters for what a ’smart’ economy might mean. As far as the government policy document goes, it refers to the problem in society today. We have a lot of engineers and a big bunch of wires, and it is about offering services over IP to an international market, in order to lower cost of ownership of systems and administration for the same. It is a large business opportunity for Ireland basically, with the prospect of quite a lot of employment. BOH.

http://www.realworldtech.com/forums/index.cfm?action=detail&id=110892&threadid=110892&roomid=2

In 2010, we have record numbers entering 3rd-level education, but our 4th-level sector has not expanded, at least since 2007, when as a nation we were spending just 1.25% of GDP on R&D, unlike the Scandinavian countries like Finland or Sweden who typically spend between 3.5% to 4% of their GDP on primary research and development.

In America the biggest driver of R&D (plus biggest spender) is the DoD. If it wasn’t for the US Military we would not have the NET. And if it wasn’t for a British Physicist - Tim Berners-Lee - working at the Centre for European Particle Research two decades ago (who wanted to share his work with German & other colleagues), we would not have had the WEB & this Blog site would not exist.

So how does a small island nation foster large investment in 4th-level R&D across all fields, without the State being the biggest sponsor? Well for one, we could encourage immigration from Indians with PhD’s & we’ve plenty of empty houses to accomodate them. Two, we could offer special tax incentives for corporate sponsorship. Three, we need to increase co-operation between private sector & academia; in every discipline or field of study where practicable & Government needs a strategy that includes specific (measurable) targets to this end.

In the case of EWI’s “transmitting electricity” / National Grid hobbyhorse, wind power, wave power, tidal power and microgeneration are making a mess of traditional strategies for managing electricity networks, and someone is going to make money out of selling solutions. Looks to me like ESB is in a good position to get in early, and potentially make good money out of it.

The smart economy notion itself needs to be challenged on its own terms. What has been passing for debate is the ‘fund me too!’ line of argument for inclusion in the effort at our national salvation.

The smart economy allows alot of people to point to a rosy future and chart a course to it. Politicans sing its praises and everyone joins in and justifies existing or more funding for their efforts.

It also allow this delusion that everyone is on their way to the top, to management, with the result being everyone in management and nothing to manage?

Is Academia to become the new Auctioneering profession??

An alternative is to think outside the box and consider what it would take to make our education/research system good and large enough to compete across the subject areas. Why not think of it as an export sector of its own where we can sell services worldwide. The US and UK universities realised a long time ago that you can charge foreign students high fees provided you can give a good enough service. An important spin-off is that one can identify the top research talent as it comes through the system and try to keep that talent here, which would considerably enhance the research capacity. To make this strategy work means getting serious about having world class universities. In contrast the approach of the government has been to hope that increased participation rates would lead to more talent in postgraduate study.

Private standards are as good or better than State standards if they are properly monitored. An Irish provider that achieve relevant ISO or BIS standard is all the same to me. The legal eagles need to be shown the door by allowing (not forcing) people to opt for standardised contracts and due diligence. This is a way of cutting transactions cost not increasing them.

The Japanese are already designing due diigence standards. Microsoft and numerous academics are calling on the EU and USA to regulate. A “smart economy” would be getting a head start before the regulation is in place.

As for what you pay Amazon, they are downstream for some. Also, the question arises as to what you are paying for in terms of contractual obligations, warranties and liabilities.

A lot of us fall for the line that trends in our own era are particularly different.

60,000 years before the Age of Discovery, humans escaped climate change and headed east out of Africa.

The technology advances of our own age, have not been monumental in a historic context.

Just wonder what the invention of the eye glass did for the world of art alone, never mind so much else.

If the Progressive Democrats were a part based around principles of economics. If the Green party is based around principles of the environmental movement. If other political parties can be argued to have been based around issues like land and/or re-distribution of wealth. Then we are still awaiting in 2010, for the junction between the knowledge based society, and politics. It has happened on and off, at various points, during election campaigns and so forth. There are elements about Obama’s campaign, which have to do with access to the leadership, which seem to foretell of a new discursive, inclusive kind of society.

Listening to Sean Barrett, FG TD for DLR constituency on RTE’s The Week in Politics, his suggestions for the role of parliment within our society was revealing, of how things may alter in the near to medium future. To reflect a society which is based more around technologies which enable us to gather, share and re-direct information through various mechanisms and means. You even see people such as Mark Little dropping out of the traditional broadcasting industry, to explore alternatives. You have people such as George Lee, unsure of where they stand in society today, and un-happy about the platform they received after a vote of 25,000 in Dundrum area. I read an article by Fintan O’Toole in Saturday’s Irish Times, reviewing a theatrical production at the Abbey Theatre, which starred David McWilliams.

Believe it or not, much of this activity which is happening in un-connected fashion, at the end of the day will add up to something, which may underpin a new knowledge based society, new knowledge based villages, courtyards and hubs of entreprise. But to understand and interpret what is going on, it will require more than understanding of wires and signalling systems. It will require people with the right sort of understanding to interpret it from a social point of view. And, a political movement which will provide the said new communities with formal representation. BOH.

http://www.irishtimes.com/newspaper/weekend/2010/0626/1224273341457.html

Colm’s vision is fine.

Aspiring to a high standard education system is a worthy goal and some price should be put on it and how to finance it.

However, as the so-called ’smart’ economy is presented as a jobs policy for a specific area of economic activity, in particular the multinationals’ areas of activity, requiring a large slice of public funding, it is relevant to raise the issues of outcomes.

I would say that the concept is woolly enough without adding so many other job areas - - it would certainly bring more demands on the public purse for funding, some of it ineviatbly feathering nests rather than for the public good.

If the mythical status of the knowledge economy is achieved, the workers at the bottom of the pyramid would be support staff for the ‘brainy’ folk in call centrers and in other sectors.

As for a policy to “pick winners,” who in the chairborne chain of command can do that?

Have a look at the prices being charged by my cloud provider.
http://aws.amazon.com/ec2/pricing/

Do you really think some Paddy endorsement or standard will influence me? Or influence the decision of providers to locate here… All I or anyone else really care about is value….

This smart economy is ruthless, barriers to entry are always dropping, and what used to be niche either dies or becomes commodity very quickly, there is no room to support a kleptocracy of regulators, legal eagles and state inspectors. They need to have the same productivity as those they serve.

That said, I agree the social, cultural and legal framework is important. But legal reform is urgently needed with major implications for this sector…

The game has changed utterly, Paddy Standards have no place in the modern world. The innovation is as much business as tech, and having rent seekers attempting to become the gatekeeper/approval body will not be tolerated by anyone ’smart’.

The Irish Business Model, an example: Take something as old tech and as simple as plumbing, the NSAI have standards for Irish pipe fittings. These are copied from the British and changed slightly so they are not inter operable. A BS 1/2″ fitting is different to a Irish one, which is different again to the EU standard, (you can force them to work together using different washers)
Result: ‘busy work’ for civil servants and increased costs for everyone. (And of course have created a niche/opportunity for control for themselves by stopping imports of stuff with perfectly good EU/BS standards)

I would hate to think what Paddy Regulators would do if let loose on the “smart economy” … the mindset is to extract rent and to control…