Audience member: It is an amazing panel, and there are so many thoughts and ideas going through.

There was one that spoke to me, because of something I had experienced, and was on the list but I don't think it's been well addressed by the panel - the internationalization of commerce through the international Internet. We've been running into a lot of regulations; I can give you an example. We were teaching folks from Belize how to build networks and use routers in Montreal a couple of summers ago, and when they got home they discovered they weren't actually legally allowed to run them, because a monopoly had already been granted by the country for all telecommunications equipment there. We have run into other situations when deploying spread-spectrum radios, and governments don't like them because they aren't blockable or snoopable in certain countries, and they have a tendency to lead to democratization there. So, what kinds of things are people doing to eliminate these governmental impediments, international impediments to the internationalization of the Internet?

William Janeway: Do we have - Bob? Or anybody want to comment on that, specifically? Carol?

Carol Lee: Well, I think part of it is a question of trying to change the understanding of political elites in developing countries. The world is going to run away from them if they cling to the monopolies of the past. There is no way to take a dead-hand monopoly telecommunications provider, with its high costs and its traditional lack of innovation, and to even stay at the same gap as now. The gap will widen.

That doesn't make it easy, but some of the governments in the developing world have begun to loosen that grip, because they recognize that they need to open up to competition in order to foster investment, in order to foster improved communication, and begin to recognize that if you don't have good communication you can't have meaningful economic growth and you can't move into a different paradigm.

But it is hard, and the World Bank, which engages in the policy dialogue, rather than my corporation, which is in the investment side, works away at it and preaches and tries to attach conditionalities to its lending and develops projects, but there's backsliding as well as forward movement, and it is a slow process.

William Janeway: Any other responses? We move to a question here on my left.

Audience member: Yes. Some of us in Michigan are very concerned about what we do in the next century as we are, to get a better hold on the economy of the information age to match what we've had as a hold in the mechanical age with the automobile. As we try to diversify our economy and move forward, there's one theory that's very intriguing at least, which says that the information superhighway is to economic development what the canal or the port or the railroad was in the past. It could be a major determinant of economic location, where firms can thrive and where firms might even come in. And some areas have even built high-speed, wide-band fiber optic networks around themselves, invested a great deal in infrastructure to facilitate access to the information highway.
And yet, we hear Robert Lucky, Lucky's corollaries to Moore's Law, that suggest that almost anything you build, especially something that takes so long to build, will be obsolete by the time you finish building it. So I guess the question is, are there things that cities and states can do in the way of infrastructure to make themselves better participants in this process, or is just a question of not getting, just waiting for the world to move with them?

William Janeway: Before I turn this over to the panel, where I know that there's going to be some comments, I want to cite the history of almost 200 years ago, when states and localities drove the canal-building boom in the United States and invested vast amounts of money for that time. It was called internal improvement. It was the Hamiltonian vision of driving economic growth. And they did so and committed their tax revenues just in time to get wiped out by the railroad revolution of the 1830s and 40s. That discredited public investment in infrastructure for more than a generation, in fact, for many generations in some states like Pennsylvania, and led to the dominance of the Pennsylvania Railroad as a private enterprise. That's an exercise in saying that while this is a brave new world, there's a lot to be learned from history.

David, with respect to this brave new world, over to you.

David Liddle: I very much agree with what Bill said, and I think it's very important not to think about this as a problem of infrastructure in terms of something to be built and physically installed. My view is that by supporting education, especially, but by no means limited to, higher education, the best predictor on the map of the United States and at least of Western Europe - and I only say that because I haven't looked anyplace else - the best predictor for local spending on and commerce from and general thriving of Internet and electronic commerce is the presence of a strong university community and a relativity high local level of education.

Now it depends whether you want to think of that as good news or bad news. You're asking the question from the point of view, "So, what should we do for the state of Michigan? What will replace the vigor created by the auto industry?" and so on. In that sense, that's what you want to do. Not run, subsidized by quickly obsolete fibers and other stuff like that. This, however, raises the other side of the question, which says, yeah, but for the many citizens of any location, particularly Michigan, say, who have made a living through the auto industry, where there are roles that disappear and where those people aren't overnight retrainable to what they do in a new way, I still believe actually that the answer is the same. In other words, that quite frankly this kind of information technology is a much stronger tool than we've ever had before for giving people fresh opportunities to make a new living that they enjoy and for breathing new life into an economy.

So, yeah, I think there's a lot that can be done to stimulate it, but I think this time it's not about bulldozers and concrete and orange trucks or orange cones and all the stuff that have been the traditional, semi-well-meant, semi-pork-barrel investments. This time round, it's something that, if people really sign up for it at a much more human capital kind of level, really provides a springboard for development.

William Janeway: John.

John Seely Brown: Yeah. In the world we're moving into, I think we will need to reinvent how training and lifelong learning will happen. Human capital is the crucial ingredient for wealth creation, but we can't expect to constantly send everyone back to school every five years or so to get reskilled in order for them to use each new generation of technologies. We must find a way to transform the workplace into a seat of learning -where working and learning are two sides of the same coin.

We must also stop thinking of the Internet as a network but think of it as a new type of information medium or fabric, which brings producers and consumers of knowledge together all the time, blurring the boundaries, so that knowledge creation is happening throughout the region, captured and shared in various ways. If the universities could find a way to capture and disseminate all of the intellectual assets they currently leave on the table, they would be able to offer, using the Web, contracts for lifelong learning, etc.

Perhaps, said too poetically, we need to find ways to harness the small efforts of the many as opposed to just the large efforts of the few in order to create powerful, cost-effective learning environments.

William Janeway: Terry.

Terrence Elkes: Just one other comment, which is along David's line. You ask what governments can do, we get back to the discussion earlier today. Generally, my view is, generally keep out, but interfere and move where really no other institution can play that role. I think right now the challenge throughout most of the United States - we have the privilege of great universities; we have a problem in grades K through 12. I think that's an area that governments ought to focus on, number one. Number two, we also see one thing that's unique, and that is sort of a marriage of major research universities with venture capital and with first-stage development companies in sort of clusters, whether it's Palo Alto, whether it's Austin or whether it's here, so investment in those universities as well would make eminent sense, and then let it flow.

William Janeway: I'd add two things. First, that was a great question. Second, I would re-emphasize the significance of the quality of elementary, of entry-level education. I had some exposure in the '80s to the process of how a number of very large companies, particularly Japanese companies and German companies, set about siting automobile plants in the United States. And the single most important criterion wasn't taxation at the state level; it was the quality of the elementary schools, because they were going to be recruiting people from all over the United States to come and live and work in these communities, and that was the single most important criterion. Thank you for that question. There's one more question, back in the same place.

Audience member: I'd just frankly like to follow up on a comment, the exchange really, the question of the entrenched elites and so on and so forth, and Carol Lee's, I think, excellent comment. Frankly, I'd like to use this as an opportunity to throw a bouquet to Graham Whitehead, who did service to this group beyond what he possibly could have expected to be doing when he came in today. He's with British Telecom, and the example is directly out of Britain. British Telecom went from the large complicated, very underfinanced, well-entrenched monopoly over the last 10 years to a much leaner and meaner institution with a considerable amount of policy assistance from the British Government. I don't think you could do those things without governments. They took away the monopoly, and they set forth the conditions of prosperity, and now the British telecommunications industry has huge numbers of service providers. Everybody you can imagine is in there. And, guess what? Britain is the leader of Europe in terms of prosperity, is the model, whereas 10 or 15 or 20 years ago …

(Break in tape)

Audience member (not the same one) … and someone who has been bootstrapping a couple companies. I've taken products to market by piggybacking on Kodak and Sony and Seiko and Fuji and all these other companies, access to the marketplace and their trade-show booths and such. And then (unclear) licensed my technology back in '96. I'm looking at other network-based products, that are partially products/service. And is there a good community of people that you folks might know of, an entrepreneurial community that one can tie into as an entrepreneur to get access to information and get experience, aside from the traditional venture capital? Because I find that the traditional venture capital route, in terms of my business planning skills, is a little bit onerous.

William Janeway: Bob, you want to say anything about the IEEE's services, for people with network product?

David Liddle: I can give you one fairly good pointer. I'm not sure I'll remember the URL exactly. In the Stanford University Web site, in the engineering management department, there is a series of courses that are there, but they're very closely linked to the local community, and students who take the technology entrepreneurship sequence and so on are also linked to many, many other information sources, so if you go and take a look at that, there are links to various support groups and sources of information about typical business plans and business models and services, that is, people who will give you a little free advice or give you a little consulting advice, and source books and case studies and other things that are like that. So that's not a bad place to start, and I think if you take a look there you'll bump into some like-minded souls who may be able to give you a little further advice.

William Janeway: And the last question here.

Audience member: Yes, thank you very much. Mr. McTague, I was impressed that a mature industry was invited to an entrepreneurship seminar. What you described, your entrepreneurship, seems to have been absolutely internal, to go from six to eight months to six to eight hours to crash a car. I'm an ex-Techer - Third and Chevy rules - but, it's OK. How do you see entrepreneurship developing or becoming more valuable inside an industry which is already considered mature? Where does it happen? How does it happen? What is your knowledge base? How did it come from your insight, and where's it going to go?

John McTague: Well, one of the things that happens because of so much availability of information inside a company, because of intranet stuff for example, is a breakdown of authority. The traditional way of running a company hierarchically is to give people as little information as possible, to keep as much as possible in the back pocket of the top person in the company, and then he'll release as much as he has to to the next ones down, et cetera.

That's all completely broken down when you have these, when you have so much of the data and processes, business processes, product-development processes, the raw data of performance, et cetera, available to a lot of people in common. That gives people the tools to do experiments themselves without having to go and get big budgets and permission, et cetera. So, instead of the company really being 10 or 12 brains and a third of a million sets of muscles, you start getting, let me call it distributed intelligence, operating. I've only been at Ford 12 years, but over the time that I've been there, I've seen that happen at a very, very rapid pace, and it has certainly happened in other automotive companies that I'm familiar with.

William Janeway: I think one could also say that it's been particularly effective at the Ford Motor Company, which I don't think any of us would have expected 20 or 30 years ago would be more profitable than General Motors, which it is now. Yes, Terry?

Terrence Elkes: If I can make a point. That's a very good question, and putting my entrepreneur's hat on, it opens up entrepreneurial opportunities. For example, one of our companies recently, I guess three years ago, developed a large expertise in what we call the intranet. And that's what I think we're referring to in terms of how we break down the barriers of communication in mature companies. If you look at the list of clients that our little company has, 90 percent of them come out of the top 50 or top 100 Fortune companies. So that, I would amplify, is an example of hopefully how a mature industry begins to become entrepreneurial and how an entrepreneurial opportunity arises for those who supply the wherewithal.

William Janeway: Yes, Lawrence?

Lawrence Wilkinson: Well, just at the risk of sounding contrary, I had the chance once to talk to Alejandro Zaffaroni, the man who once ran Syntex and then founded ALZA, marvelously successful drug-delivery system company. Asked him, because it wasn't at all apparent to me, why it was that he left a drug company to start a drug-delivery systems company. Why didn't he just open a division or do it in a corner somewhere out of the way? And he said, "You know, I moved it out of Syntex because I had to." I said, "Well, I don't understand." He said, " Well, any venture, any new venture, any entrepreneurial venture that can fail, will. And if you leave it in the bosom of a parent company, it'll find a way to be lax, be loose, and be less disciplined, less aggressive than it has to be."

Now, that may be an undergenerous, overaggressive way to put it, but the point he makes about focus and about not having the fallback that can let you default into the rhythms of the old company chimes with an observation another old friend made when he said, "You know, the thing about incumbent companies is they're big, successful incumbent companies because they got very, very, very good at the old game, the old rules." There's everything to be said for innovation, and indeed everything to be said for entrepreneuring, that can be contained in the envelope of what this enterprise can do, but, this guy observed, "You know, the history of commerce is littered with the carcasses of great big incumbent companies that have diversified or entrepreneured their way into fields they don't understand." They've sort of done it textbook right in the wrong direction. He suggested - and I'll just sort of table this suggestion, because it's a good one we've never figured how to follow up - that it might be good even as we pay attention to how to entrepreneur or intrapreneur within large incumbent, successful companies, that we think as well about how gracefully to let them die, to wind them down, to challenge the assumption that any institution that was ever chartered and grew and became successful needs forever to continue growing.

William Janeway: Thank you very much Lawrence. I think it's fascinating that we came absolutely full circle from where John began, with intrapreneurship in the re-invented Xerox, to this last discussion.
With a final, final point that Lawrence made, it may be that a critical condition for success or reinvention of an incumbent company is a near-death experience. Xerox had one. Ford had one. As a final speculation, I think it's going to be quite interesting to see what happens in Japan and Korea, looking forward 10 years, as a set of enormously successful companies go through the near-death experiences which they are having in real time, and which of them emerge, and if they do emerge, how they function in our brave new world.

Thank you all very much. I thank the audience as much as the panel.