A glass half full


25 Sep 2003

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It started back in June with a phone call. It went something like: “Hello, Eoin? Mary here. Listen, can you chair a new committee to look at what Ireland Inc needs to do to ensure growth and employment in the years ahead…?”

So was born the Enterprise Strategy Group (ESG), which convened for the first time earlier this month. The caller was, of course, Mary Harney TD, the Tánaiste and Minister for Trade, Enterprise and Employment. On the other end of the line, Eoin O’Driscoll (pictured), a seasoned and respected telecoms industry professional who was now faced with one of the biggest challenges of his career. In six to nine months he would be required to produce a blueprint for Ireland’s industrial strategy up to the year 2010.

Devising industrial strategy is something in which Ireland has a pretty good track record in modern times. From TK Whitaker’s famous ‘Grey Book’ in the Fifties to the Telesis report in 1980 to the Culleton Report in 1992, the past 50 years have been punctuated by largely successful attempts to shape Ireland’s economy and project it onto a growth path.

But why is another report needed now? O’Driscoll feels it is partly because the economy has slowed dramatically from three or four years ago and partly because the whole competitive environment is so dramatically different from a decade ago.

“If we go back to 1992, we would have had a number of factors in our favour: relatively low costs, high availability of graduates, especially in science and technology; and very little competition within the EU that could compete with us on those two factors, plus low [corporation] tax. If you fast forward to the present day, we don’t have the low costs we did then, we don’t have the numbers of science and technology graduates and we’re facing severe competition from central and eastern Europe, India and China,” O’Driscoll observes.

Talking to siliconrepublic.com at the outset of his mission, O’Driscoll feels it is premature to go into detail about the work of the ESG or speculate on its findings. “It would be wrong to predict the outcomes,” he insists. “The important thing now is to put a process in place that’s robust, that starts to look critically at the foundations that we have, as well as the opportunities and challenges, and then try to come up with the right strategic decisions going forward.”

O’Driscoll does not pretend to have any highfalutin ideas of how the group will go about its job. His approach is extremely pragmatic and based on the principle that the quality of the output (the conclusions) will ultimately depend on the quality of the inputs (the individual members of the ESG and the process used to manage the work of the group).

The members of the ESG are a combination of those nominated by the Tánaiste and by O’Driscoll himself — 16 in total. O’Driscoll says that what distinguishes this group from many others before it is that it mainly and deliberately comprises people who operate outside of the State framework.

“I was very encouraged by the fact that the Tánaiste wanted a fairly radical view from outside of those who are normally engaged in policy-making,” O’Driscoll states. “If you look at the composition of the group, I would say it is fairly representative of all of the constituencies that are going to be required to have a successful enterprise economy going forward.”

It would be hard to argue with this. The membership ranges from senior industrialist Reg Shaw, managing director of drugs company Wyeth, to trade unionist Des Geraghty, general president of SIPTU; from entrepreneur Alan Dwyer, managing director of Cork-based fashion house Eurostyle, to leading academic Rita Gunther McGrath of Columbia Business School.

Such an eclectic group of people and, by extension, views will only be a good thing, O’Driscoll argues. “It would be foolish and irresponsible to go forward without making sure that we have good, strong representatives with strongly held views from various parts of society,” he says.

O’Driscoll sees his role as chairman as harnessing the energy and brainpower of the group. He insists he will be demanding “a high level of engagement” from the members, who will be expected to devote at least one day a week to ESG work. It is he who will set the parameters of the discussions and generate sufficient momentum to ensure that the tight deadline is met. It is no surprise, therefore, that the word ‘process’ peppers his conversation. Without an effective process in place, the ESG would quickly lose its way, he feels.

The exact nature of the process has still to be fleshed out but the starting point must be, he believes, to ask the right questions. “The real challenge is to try to envisage what scenarios might exist 10 years from now and, if they were to exist today, what decisions would you make. If, for example, you said we are going to be the economy with the highest standard of living in Europe, what impact would that have on the industrial policy decision? If you were to have a very high reliance on indigenous industry, then that raises very important questions about what you would do around intellectual property, research and development (R&D) and so on. So I suppose the first part of the exercise is to make sure we’re asking the right questions and to me that’s very important because if you’re clear on what the right questions are I think we can always get enough smart people to come up with the answers,” he continues.

The ESG will look to a number of sources for information with which to inform its decision-making. One is the experience of other successful economies. The US is an obvious one. There may, for example, be lessons in how certain regions, such as the State of Massachusetts, managed to regenerate themselves. Singapore is another example — a country in many ways similar to Ireland in terms of its size and technology focus. “I think it is important that we try to find a model for what our economic and social development should be,” he reflects. “It may be another country or region or a composite of them.”

Another tack will be to look at global trends that are likely to have a growing impact. One area that has already been earmarked for greater investigation is globalisation and global supply chains. “We do need to understand globalisation a bit more deeply than simply saying things are moving to India or China,” says O’Driscoll with a chuckle. He adds that he plans to establish sub-groups to look at globalisation and other areas that are likely to have a global impact over the next 10 years.

As well as seeking opinions from its own members, the ESG will be inviting submissions from external sources. This will be done both formally, eg through newspaper adverts, and through informal mechanisms such as networking.

Collecting information is one thing; making sense of it all is another altogether. But O’Driscoll is confident that the ESG is properly resourced for this task. As well as having a dedicated five-person secretariat within Forfás, the ESG will be able to call on the help of experts within relevant state agencies where it feels it may get useful input.

While the challenge of producing the final report may be daunting, O’Driscoll has had plenty of experience managing important projects to tight deadlines. Nor is he scared of making tough decisions. When he worked for US telecoms equipment giant Lucent Technologies, he was handed the task of streamlining its European supply chain, which consisted of 2,700 people, six factories and order management systems in every country. When the project ended a few months later, there were 800 people, a single order management system and most of the production had been contracted out.

Strong leadership and project management skills, however, are not the only strengths O’Driscoll will bring to the table. An ICT professional since the mid-Seventies, he has traced the growth of the industry from initial green shoots of enterprise right through to its full flowering in the Nineties. He witnessed several of what he calls “inflexion points” in the development of Ireland’s science and engineering base: the return to Cork from the US of esteemed Bell Labs engineer Gerry Rickson who was central to establishing the microelectronics industry in Ireland; the development of the Plassey Park innovation centre in Limerick in the early Eighties and emergence of world-class companies such as Aisling, Interpro and Blackburn; and the later emergence of even more successful technology firms such as Euristix and Iona.

Over those three decades, certain lessons have hit home with O’Driscoll. One is that a successful ICT industry is not created overnight but happens in cumulative waves of development. Another is that the combination of a successful indigenous technology sector and an influx of multinationals has created a whole new cadre of managers skilled in international business. A third is that R&D must be part of any development strategy if Ireland’s economic success story is to continue.

As vice-chair of ICT Ireland’s working group on R&D, O’Driscoll is helping to devise a strategy to boost the amount of R&D in the economy, an area in which Ireland lags behind its peer-group economies. He points out, however, that getting more into R&D and innovation — ‘moving up the value chain’ as it has become known in both government and industry circles — is not a risk-free exercise.

“As well as being squeezed from the bottom there’s also a danger of being squeezed from the top: as the lower economies squeeze you on cost, the higher knowledge economies start to compete against you at the top end. It’s damned competitive up there as well,” he observes. “That’s why the R&D initiative is not about moving a little bit up the value chain; it’s about being very good at the top of the value chain. But it’s not just about R&D; it’s also about being very good at services. And being close to the customer and making sure we have an innovation culture that starts to get people to understand customer needs and technology. The real innovation is when we get people to put customer needs and technology together. For too long, I think we’ve thought about innovation as being something that comes out of R&D.”

O’Driscoll believes that with the €546m committed to Science Foundation Ireland the country has taken a major step towards rejuvenating its neglected science base. He is less impressed, however, with the Government’s decision to pause the Public Research in Third Level Institute funding, which covers such things as equipment and laboratories. To O’Driscoll, the funding freeze is a serious mistake.

“It’s fairly clear that R&D is very important to the future of any non-low-cost economy. A decision was taken that this was very important and a decision was taken to fund it. The fact that there’s a pause is a huge cause for concern, especially the fact that it wasn’t flagged in advance. Decisions about R&D have to be long-term ones,” he adds.

While investment in R&D and science might be great for the country in the long term, O’Driscoll acknowledges the deep concerns that people have about the economy, in particular the effect of rising costs on an already fragile ICT sector. He believes that the multinational sector is facing a crisis that demands a strategic response on the part of local managers. In his opinion, bosses of Irish subsidiaries should work hard to attract more investment to Ireland where it makes sense to do so but stop wasting time trying to protect activities that it makes more sense to do somewhere else.

“Those multinationals that continue to do the same thing here that they did five, 10 years ago — which is basically take a production plan from a sales entity outside of Ireland and produce the product and ship it — won’t be here 10 years from now I believe,” he says. “Those multinationals that are looking at how they can deepen their technology ties and build some strategic value, I believe those subsidiaries have a huge future here and will attract in more value for the benefit of the Irish economy.” The fact that several multinationals have already successfully re-oriented their operations to focus on higher value areas shows the merit of taking action and, conversely, the folly of doing nothing.

He reflects: “I think we’re right to be anxious about the future but it’s very important that that anxiety does not paralyse us and cloud the understanding that we have very firm foundations. We have venture capital, we have educated managers and we have good research going on in universities. So I don’t understand the pessimism that exists. I understand the anxiety but I think it’s important that we don’t let that anxiety turn into a paralysis that says we should do nothing.”

In summary, O’Driscoll believes we should stop wringing our hands, stop doubting ourselves and get on with the business of competing in a global economy.

“I think there is something in our culture that has served us well in the past 10 years. We need to revive that now because there is a danger, a real danger, that we could start to lose confidence in ourselves again. There’s no reason for that. We are far better positioned now than we were in 1992 before the 10 years of growth we had. The key thing is that we have self-confidence and are aggressive about realising the opportunities,” he concludes.

By Brian Skelly

FACT FILE

EOIN O’DRISCOLL

Position: chairman of Enterprise Strategy Group
Education: graduate of UCC (1975). Holds a bachelor degree and master’s degree in electrical engineering
Industry experience: worked in electronics and telecoms industry for more than 20 years in Ireland, Canada and US. Senior positions with Nortel Networks, Stratus, Wang and Lucent Technologies
Other roles: on the boards of several private companies. Member of National Microelectronics Research Centre advisory board. Board member of American Chamber of Commerce in Ireland and ICT Ireland.