Global Talent Pool

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The Evolving Global Talent1

The Evolving Global Talent Pool 1

The EvolvingGlobal Talent PoolIssues, Challengesand Strategic

Implications

The LEVIN Institute

The State Universityof New York


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Contents

The LEVIN Institute 4

blished bye Levin Institutepyright 2005rights reserved

aphic Design

catello Design Centre

otographyn Levinson

Board of Directors

Honorary Co-ChairsGovernor George E. PatakiChristine A. Ferer

ChairPaul Tagliabue

PresidentGarrick Utleyex-officio

Matthew Nimetz

Bradford Race

Henry Schacht

Alair Townsend

Robert Wilmers

Administration

PresidentGarrick Utley

Provost and VP of

Academic AffairsDenis Fred Simon

Vice President for Finance andAdministrationMichael D. DiGiacomo

Director, Executive EducationRichard Mosenthal

Director of DevelopmentPeggy Hatton

Director of Conferences andSpecial EventsMarge Lipton

Director of Marketing andCommunicationsMeera Kumar

Introduction

Executive SummaryDenis Simon

Session 1Perspectives on the Global Talent Pool

Session 2Demographic Trends

Keynote Speech ofNicholas Donofrio

Session 3R&D and How Innovation Works

Session 4National Strategies for Education and Innovation:Comparative Perspectives

Keynote Speech ofPeter Schwartz

Session 5Policy, Politics and the Global Talent Pool

Session 6What Strategies have Global Corporations Institutedto Address the Globalization of the Talent Pool?

Keynote Speech ofElaine L. Chao

Session 7Next Steps, What Needs to be Done?

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The LEVIN Institute The Evolving Global Talent Pool 76

Human capital is taking on new meaning. Over thepast several decades the industrialized world has seenan increasing number of its manufacturing jobs moveoff-shore. More recently, we are seeing (and debating theimpact of) higher value-added service jobs that are beingout-sourced off-shore, as well as witnessing the growingsophistication of manufacturing, engineering, and ITservices, and R&D in emerging economies such as Chinaand India. What is driving this phenomenon is the marriageof global capital to the rapidly expanding pool of knowledgeworkers in what were, in many cases, closed societies,but are now part of the increasingly open, global economy.

The potential for emerging economies that can exploit thedynamics of global re-structuring is clear. So too are thechallenges that face established, prosperous societies thathave long assumed that they will continue to dominateknowledge industries. The conference on The Evolving

Global Talent Pool, held at the Council on Foreign Relationsin New York City in June 2005, was designed to movebeyond the current rhetoric over outsourcing and emergingcall centers in Bangalore and similar locales, to focus onthe rapidly growing number of high-end knowledge workerswho are emerging from increasingly stronger and betterequipped universities around the world to enter theglobal labor force.

At The Levin Institute our research is devoted to criticalinternational issues such as the worlds evolving globaltalent pool, and their implications for business, publicpolicy, higher education, and, indeed, to standards of living.We seek to better inform public discourse regarding suchpressing national and international issues, as well as toserve as a platform for addressing questions that cutacross intellectual constituencies and traditional discipline-based academic boundaries.

In this publication, we summarize the discussions on avariety of topics and perspectives that relate to our subject.

You will also find the text of our keynote speakers. I hopeyou will find the fruit of this conference to be of interest.It is certainly of importance.

In June 2005, The Neil D. Levin Graduate Institute ofInternational Relations and Commerce partnered with theCouncil on Foreign Relations in New York City to hold atimely and important conference on The Evolving GlobalTalent Pool. Working with the Councils Maurice R. GreenbergCenter for Geoeconomic Studies, the two day eventfocused on one of the most critical aspects of the changingdynamics of globalization: the increasing significance ofnew sources of high-end knowledge workers in East andSouth Asia, as well as in Eastern Europe and elsewhere.

Speakers came from around the world, including Chinaand India, to share insights and learn from each other.Presentations were made by leaders of global enterprises,as well as R&D directors, academics, and policymakers.They shared their knowledge and thoughts on theimplications of the new face of the global talent poolfor both the developed and developing world. Clearly, as

all agreed, we are only at the beginning of studying andunderstanding the impact of this new powerful humanresource. We believe that this publication will be avaluable contribution to that effort.

The Neil D. Levin Graduate Institute of InternationalRelations and Commerce is a free standing research andteaching institute within The State University of New York.Located in Manhattan, it is a new academic enterprise thatintegrates the curricula of management schools with thatof schools of international relations to prepare managers tooperate effectively across borders and cultures, especiallyregarding the deployment and utilization of this evolvingglobal talent pool. It is with that vision and mission thatwe want to share with you the results of this conference.

ul Tagliabueairman

Garrick UtleyPresident


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The LEVIN Institute

Executive Summary

As we move ahead deeper into the 21st century, the effectsof globalization continue to be ubiquitous. The dynamicsof global economic and technological development areproducing dramatic, indeed, revolutionary changes in thecross border movement of talent, capital, innovation, andintellectual property. Amidst this pronounced re-structuringof the global workplace, prevailing assumptions about thenature of international competition and the process ofeconomic development are undergoing a fundamentalre-thinking in many quarters. While the exact shape andconfiguration of the new global economic order andtechnology system remain unclear, it is clear that the role ofhigh end scientific, engineering, and managerial talent thesupply and demand as well as qualitywill be a pivotal issuefor both public and private sector actors.

In this new, highly fluid and sometimes turbulent periodin world history, competition will revolve around the abilityto access, manage and coordinate specialized trans-borderknowledge networks structured around both research& development and educational systems. Under suchcircumstances, countries seeking to promote their owneconomic development or maintain and enhance theircompetitive positioning, must have in place a high-endhuman talent pool that will be their ticket to participatein the types of innovation-related activities required forsuccess by the steadily demanding conditions of the globaleconomy. Countries such as India and China already havemade substantial progress in this regard and have achieveda much higher level of integration into the mainstream ofglobal economic and technology affairs. Accordingly,educators, policymakers, and business leaders need tobe fully engaged in understanding this increasingly complexglobal environment, an environment that necessarily willhave a direct and ever-present impact on individual lives andon the standard of living in nations around the world.

The issues surrounding the global talent pool aremultifaceted. The exchanges at the conference seemedto focus on five issues: First, there are the supply-sidedimensions, which revolve around the degree to whichgovernments have been able to put in place effective andefficient systems of higher education to prepare sufficientnumbers of qualified individuals to handle the ever moredemanding job requirements of the knowledge economy.To illustrate the rapidity of the changes occurring, one

just has to look at the U.S. versus the Indian and Chineseeducation systems. While U.S. universities graduated 60,000 +engineers in 2004, China and India together graduated five

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nis Simonovost and VP forademic Affairs


times as many. Moreover, the quality differences in highereducation that were seemingly unassailable 20 years agoare steadily disappearing as the investments made by theIndian and Chinese governments have started to pay off interms of faculty, facilities, and curriculum.

Of course, the simple availability of talent does not ensureits effective utilization. Nor does it ensure that the structureand composition of the talent pool are well matched to theevolving needs of the economy. This is true for domesticenterprises and government organizations as well as forforeign companies seeking to harness the new pools ofskilled talent available around the globe. As many of theconference participants noted, while concerns continue to beexpressed about talent shortages, one burning question iswhy there is such poor utilization of existing talent. Is enoughbeing done to nurture existing talented individuals, and haveemployers found the right combination of material and

affective rewards to motivate people to take on challengingassignments? This is an especially relevant question as theimperatives of competition and growth combine to placeincreased pressures on corporate leaders to produce more inthe way of new, innovative products and services.

The second issue receiving critical attention at theconference dealt with the demand side of the global talentquestion. Companies such as Microsoft, CISCO, IBM, andSiemens to name just a few increasingly see the worldas a series of differentiated talent pools; to service globalmarkets as well as local ones, it has become necessary tohave almost on-demand access to these hubs of talentedindividuals. Corporate patterns of innovation are indeedchanging as evidenced by the fact that more overseas R&Dis taking place by U.S., European, and Japanese firms,especially in the Asia-Pacific region. The consequences arepotentially far-reaching, and as one participant suggested,we may be witnessing the end of national systems ofinnovation and a move towards globally integratedsystems of innovation.

With competition for talent intensifying on a globalscale and traditional models of technology creation andcommercialization undergoing a significant transformation,the role of government in the talent arena formed a thirdfocal point of discussion. Some nations have decidedlyattempted to develop a national strategy based on thebelief that domestic governments are not yet ready to cedeover their domains to the demands of global markets andcorporations. China, for example, has instituted majorreforms to open up its science and technology system andenhance it own innovation potential. Toward that end, it also


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Finally, the last issue taken on by the conferenceparticipants addressed the critical challenges ofmanaging the dislocations and those groups that havebeen marginalized by the impact of globalization. Recentcorporate decisions to bring tools and technology to thenewly available talent overseas rather than emphasizecentralization of talent hubs at home have raised domesticopposition to such processes as out-sourcing and off-shoring. Why firms move specific operations overseas, andwhich pieces of the value chain ultimately are selectedreflect a diverse set of considerations with labor costs justbeing one of the key factors. Companies also are looking atlong term demographic trends as well. There is no doubt,however, that certain groups are disadvantaged by thechanges occurring in the ways enterprises re-organizeproduction and knowledge-related activities. This raises abroad range of socio-political issues as well as ethical onesas the footloose behavior of corporations promises to

increase, focused on achieving higher and higher levels ofglobal efficiency and cross-border coordination. It also isquite apparent that these processes of change in theproduction and innovation systems of global companies aremoving ahead at a faster pace than educational institutionscan cope. This means that skills requirements are shiftingvery quickly and demand patterns are changing significantly,further creating disruption in the career plans of recentgraduates who find themselves with increasing frequencycompeting on a global playing field.

To paraphrase the comment of one participant duringthe last wrap-up session, we are now in the midst of arevolution of revolutions demographic, technological, andcommercial. Many groups are trying to develop effectivecoping mechanism, but towards what end? If indeed, assome suggested during the conference, we are embarkingon a fundamental paradigm change in which both the natureof the playing field and the rules of the game are changingon a global scale, the current period of adjustment is likelyto be filled with wrenching changes in many instances. If, on

the other hand, there are explicit limits to globalization,derived, in large part, from prevailing national prerogativesand sustained cultural divides, then the types of responseswill be of a very different sort. The conclusions reached atthe conference did not provide clear answers in this regard,except to suggest that the contest for global talent is notgoing to abate. Moreover, whether we focus on the flows oftalent across the globe or the development of specializedtalent pools around the world, the effective recruitment,management, and retention of high end talent will remainone of the best guarantees for global inclusion in thedecades ahead.

The LEVIN Institute

is attempting to liberalize its human resource systems toattract more talent, including those who have been trainedabroad but remain reluctant to return home. The countriesof the European Union, under the umbrella of the LisbonAgenda, are pushing for a revitalization of R&D, with thehope that some of the scientists and engineers who mayseek to migrate to the U.S. might have their minds changedas a result of the new, innovative environment being createdacross the continent.

Yet, in other cases, such as the U.S., even as innovationand competitiveness have been propelled to the top of thenational agenda, the potential for creation of a formalstrategy seems to be limited due to a combination ofstructural and ideological factors. This does not lessenthe challenge for the U.S., which must enhance itscapacity to absorb knowledge created elsewhere, do abetter job encouraging entrepreneurship, and improve the

management of visas and immigration-related processesso that foreign students as well as experienced foreigntrained talent can more smoothly and efficiently enter theU.S. and thus fortify the ranks of the American talent pool inscience and engineering. While it is hard to identify concretedata to confirm that there is a real shortage of qualifiedhigh-end talent in the U.S., there are real, data-drivenconcerns about whether sufficient numbers of women andminorities are willing to pursue future careers in thesciences and engineering.

A fourth issue area that attracted much attention wascentered on building a global organizational culture.As noted earlier, the talent strategies of most majorcompanies have been influenced quite heavily by the onset of globalization, which has raised many questionsabout how to build an effective organizational structure tofacilitate operations across borders and cultures. Up to now,the track record of large numbers of firms seems filled withmany inconsistencies. Global imperatives seem to portend ashift away from a high degree of local attentiveness, yet

many corporate executives report that just the opposite is thecase, especially where large local markets exist and thequality of local talent is critical to their competitive success.Creating a truly global culture inside an organization seemsto be the quid pro quo for truly harnessing the advantages ofa multicultural labor force. Of course, this is not an easy taskand requires the blending together of managerial systems,rotational job assignments, and entrusting increasinglyhigher end work to the various local entities. It is not alwaysclear that surrendering the more predictable work setting athome for lower costs abroad can be achieved withoutincurring new types of heavy transactions costs.

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Session 1

Perspectives on theGlobal Talent Pool

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Speakers

Global Talent Pool: Shifts and Transitions.Is there a Global Talent Market?

Denis SimonProvost and VP for Academic Affairs, Levin Institute

The Impact of Globalization on Corporate TalentUtilization & Deployment: New Models and Perspectives

William FischerProfessor, Institute for Management Development (IMD)

Strategic Role of Brainpower in Economic Development:The Developing World Perspective

Tino PuriFormer Managing Director, McKinsey India,Special Adviser, General Atlantic

Moderator

Garrick UtleyPresident, Levin Institute


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talent pool so it makes sense strategically. A lot of countrieshave talent, but theyre not able to create the kind ofenvironment where that talent can really make itself felt.

While the competition for talent is fierce today, there isnothing more important than this issue because it speaksto our future. The corporation is the best vehicle forsecuring that future because not only is it the place talentedindividuals are given the license to excel, but its the placetheyre given the resources to make that possible. Also,no other actors have the global reach that the moderncorporation does. Unfortunately, the corporate sector isnot working as well at this as it should.

One of the reasons for that is that we arent thinking enoughabout talent from an individual perspective. People need

to be developed in such a way that theyre stretched towhatever theyre capable of doing. Companies claim theyhire great people, yet year after year, when you look at theresults, the results are average. The relationship shouldntbe great people in, average results out; we need to bebuilding organizations and opportunities to get people inand extraordinary results out.

The companies who are doing it right view talented individualsas corporate rather than local assets. In companies withstrong corporate cultures, nationality doesnt matter somuch. In companies with weak corporate cultures, nationalityis a big deal. Organizations need to go after talentedindividuals as a competitive advantage. They need to hirefor skills and worry about attitude and nationality later.

Every company says it wants to build a global cadre ofmanagers, but its just not happening. One of the reasonsits not happening is because of mundane logisticalroadblocks, things like families, schools, and children.Theres probably a lack of imagination about how to tackle

those sorts of things. Expatriates are unfashionable atpresent, and thats unfortunate because they are the wayin which corporate culture and values gets transmitted.Theyre also the way corporations learn about the world.

Finally, in thinking about the global talent pool, dont forgetto start with the individual, no matter his or her nationality.

lliam Fischer

The change in India in the last 15 years has beenextraordinary. Its moved from being a very isolated,somewhat xenophobic country to being globally connected.When India began to liberalize its economy in 1991, it did soout of necessity rather than conviction. But since then, theeconomy has grown at about 6 percent per year. When aneconomy grows at that rate, purchasing power expands,people spend on things they couldnt afford before, andnew industries come into being that didnt exist before.

The quality of life has also improved in India, but so farits been primarily for the top third of the population.The bottom third is still not yet really benefiting fromthese changes.

But the talent pool of India is now poised to emerge onthe global stage, to learn and add value to the worldeconomy. Our stock of scientists and engineers is about

3 million at the moment. We add about 100,000 a year.The disciplines of emphasis in India are mechanicalengineering, civil engineering, electrical engineering,electronics engineering, software development, andchemistry. You might begin to add biology to that list.

We also have an expanding managerial talent pool andI would argue we should not overemphasize engineeringbecause management is the real constraint. Very quickly wewill see that management in India is going to become theconstraint on what India can do. Additionally, the capacityto actually incorporate non-Indian managers into Indiancompanies is going to become a very significant constrainton development.

The capacity of our educational institutions is small, butthe competition to get in at the top institutions is intenseand the rigor of that education is extraordinary.

The Indian diaspora is now becoming a significant factorin the countrys development. About one third of Microsofts

engineers in the U.S. are Indian. One sixth of Intels productdevelopment engineering staff is Indian. Forty percent ofSilicon Valley startups over the last 20 years have beenstarted by Indians.

Where will India have the most impact on the global stage?The first will continue to be in the IT sector. India hasdeveloped some capacities in how to do very large scalesoftware development, where in fact, the individual issubordinated to the team, and the real issue is how to getexcellent teams to work very rigorously on a very largescale. The second is the IT enabled services area. This is

Tino Puri


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The LEVIN Institute

Speakers

Global Demographic Trends andEvolving Talent Needs

Joseph ChamieDirector of Research, Center for Migration Studies

Education Investment and Demographics:Creating Competitive Advantage

Anne GoujonVienna Institute of Demography

U.S. Demographic Trends and AmericasFuture HR Base

Michael TeitelbaumProgram Officer, Alfred P. Sloan Foundation

Foreign Investment Decision-making:The Place of Human Resource Factors

Fred TipsonSenior Policy Counsel and Director for InternationalDevelopment Policy, Microsoft

Moderator

Tim FergusonEditor, Forbes Global


Demographic changes are playing an increasinglysignificant role in defining the composition of theeducational sector and the workforce in both developedand developing nations

Educating an international workforce will require ahuge financial investment

Demographic shifts have potentially critical implicationsfor policymakers who face growing pressures to ensurethe presence of a well-trained cohort in science andengineering on a continuous basis

An educated population does not guarantee competitivesuccess or economic development; effective channelsmust exist to mobilize the talent pool across industriesand geographies

There is no single resource as underutilized as women,and no point of leverage more powerful than educatingwomen


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Keynote Speech ofNicholas Donofrio


Increasingly we also see growth in our industry builtaround tools that enhance collaboration, connectivity,inter-operability, and a focus on the capabilities and skillsthat facilitate groups working together across geographiesand also intensely in single locations.

There is no single resource as under utilized as women,and no point of leverage more powerful than educatingwomen. Every study shows that the consequences of oneyears additional education for women is probably the bestinvestment a government can make in terms of health andeconomic empowerment. There is an IT component to thatand we have a program called Unlimited Potential that isfocused on creating community technology learningcenters to increase the basic computer skills in variouspopulations. Many of our most successful programs focuson empowering women to enter these kinds of trainingopportunities.

Finally, I want to leave with some thoughts on intellectualproperty. Whatever happens around the world in terms ofthe protection of intellectual property will have a hugeimpact on the nature of the way people make money in theIT industry. Thats not to say there is one particularapproach to protecting IP, but in some ways were engagedin a battle with the global marketplace as to what roleintellectual property will play in the future. It has deepimplications particularly within the developing world asto how the IT industry will develop.


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And after refining it with what we learn in China, we planto then add some 20 to 25 countries to the model w hen wefinally launch it.

We expect that launch to be some time later this year.Id give very high praise to the Levin team for coming tous with this great innovative idea.

I also thank our friends at The Levin Institute fororchestrating this very important conference. Through it,the conversation of global talent has clearly now beenelevated and I hope we can keep the dialogue going.As we do, we will be best prepared to not only adapt tothe change in the 21st century, but to actually embrace itand accelerate it. Thank you very much for your attention.


First, because innovation requires continual collaboration,workers in the 21st century can no longer rely on theexpertise they learned early in life to keep them in frontof the skills queue.

Second, it is unlikely that universities and other educationalinstitutions will be able to keep abreast of the fast-changingdynamic nature of work.

Third, as we step deeper into the 21st century, aspiringknowledge workers will need cross-disciplinary programsand degrees in order to compete. Historically, universitieshave found it difficult to provide such programs. There aremany reasons for that. But to overcome it, the GIOrecommends a much tighter collaboration betweenacademia and industry.

And as required skills become more and more dynamic,

business enterprises will need to assume an increasinglyimportant role as educators.

Educational systems in some countries have goodprecedent for this approach. Others are just beginning toexplore the connections. And The Levin Institute standstoday at the threshold of such transformation.

Thats why the work of the global innovation outlook led usat IBM to embark on a groundbreaking collaboration withthe Levin team, an initiative just now underway. Let meexplain and put it into context. You know as well as anyonethat our global economy is increasingly skills-based. Theability to access and deploy talent effectively is a crucialcompetitive differentiator, and as I just outlined, corporations,governments, and academia all need to collaborate tobetter link skills to emerging opportunities.

The problem, though, is a severe lack of data or at leastdata that is organized in a way we need to leverage it.Right now there is no comprehensive, accurate and reliable

information source available for tracking skills on a globalbasis, or better yet, where those skills will be needed on aglobal basis. Levin and IBM are out to fix that through a toolwe call The Levin Global Talent Index, a country-by-countryguide focused exclusively on the skills supply and themacro forces that affect it. We are in pilot phase right nowin the Peoples Republic of China, a most appropriate testbed, given all the attention on Chinas economic growth,revitalized university system, and its growing scientific andtechnological prowess. We are very excited to be working onthis important initiative.


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As a result of the emergence of global markets fortechnology, companies are now in a position to pushvertical specialization deeper into the innovation valuechain. The most important bottleneck for many companiesis the lack of experienced design engineers. The fact that aChinese company can hire very experienced foreigndesigners helps bridge that gap and accelerates thelearning process.

The internationalization of innovation is positive and createstremendous opportunities for the countries that have so farbeen left outside the global innovation circle. But that canmean a negative side for the U.S. and European countries.The question for them is how to compensate for the loss ofR&D employment.

It seems natural that defense and education should belooked at from a national perspective, and basically theyare. But in innovation systems, thats not the case; thereare a number of systems.

Weve had innovation systems in specific sectors andtechnologies, and weve had a real innovation system on alarge scale in the European Union, and within nations. Wealso have a very important corporate innovation system.And corporate systems are interacting with nationalinnovation systems. We are approaching what I like to call aglobal innovation system shaping and creating a new way tounderstand the national innovation system.

In the past we had national control of key resources,universities, research institutes and of national companies.The talent pool was also national. This situation washighlighted during the First and Second World Wars, but inthe 50-60 years after that, things have changeddramatically.

This has taken place particularly in the expansion of globaltrade and the role of multinationals. In the past,multinationals were looking for resource exploitation andmarketing. Now theyre much more after knowledgeresources. For large multinational companies, marketingand branding may be more prominent, and research anddevelopment is, of course, increasingly important.

If you look at individual countries, a very large share of totalR&D resources and innovation activities are controlled fromthe outside, by multinational companies. Companies areincreasingly political. Formerly national companies are no

n Sigurdson

longer national Volvo is now owned by Ford, and Saab isowned by GM. Innovation in this industry is no longernational but political. A politician, in order to get elected,will set up a program to support Saabs future development.This de-nationalizes the innovation system in the name ofcompetitveness.

So, while there may be a clash of interests between what isin the corporate interest and what is in the nationalinterest, we are moving into a situation where the corporateand national systems are interacting and creating a newkind of structure which could be perceived as a globalsystem of innovation.

By the year 2000, investment in research and developmentwas 2.65 percent in Korea, 2.9 percent in Japan, 1.0 percent

in China, and 2 percent in the U.S. It is important to notehow much Asia provides to research and development,which it does because Asian countries know that thefunctioning of the system cannot be compared with otherslike the European Union. We have not established aninstitution with fixed rules. We have our institutions likeAPEC or the Council of Asia Pacific that are based on non-binding arrangements and voluntary systems. The only bodyof Asia Pacific that could be similar to the European Unionis the Southeast Asia Association, as they have fixed rulesto follow.

We are trying to accommodate our policies in order to reacha common goal, but we dont need to have compulsorymeasures. Ours is a non-binding body.

Since the year 2000, APEC has been promoting aknowledge-based economy. According to APEC or AsiaPacific criteria, a knowledge-based economy is one inwhich production, distribution, and use of knowledge arethe main drivers for growth and employment.

It is crucial to manage the knowledge and exchange amongmembers of APEC. We have capacity-building programs inorder to share the different knowledge and innovationsystems to work together and reach an Asia Pacificcommunity, where free trade, free investment, andsustainable development will benefit all its members.

Asia Pacific countries have reached a high economic growthbased on 4 key factors. They are innovation andtechnological change, human resource development,efficient IT infrastructure, and a conducive business

Juan Carlos Capuay


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environment. We have a clear understanding amonggovernment, academia, and industry, and the three of uswork together. Through this proactive combination we havetransformed new innovative ideas into practical tools forindustry and we have made universities into a morecommercial enterprise.

A critical element in developing economies isaccommodating the basic knowledge of a nations economyto globalization. In order to prepare an economy for thiskind of integration, it is necessary to promote the socialdimension of the economy. A focus on innovation, researchand development, and knowledge-based economy willprepare a nation and its developing economy for thebenefits of globalization and internationalization.

There are two areas where we are paying special attention.The first is micro, small and medium enterprises. This

sector employs 80 percent of the population of Asia Pacific.This is an area where most of the people need to have newideas. They need to receive government aid in terms oftechnology or technical assistance. The other area iseducation, promoted through IT schools for young people orthe IT village for those already working or already part ofthe economic life.

The purpose of this is to prepare Asia Pacific to face thechallenges of globalization through the use of technology.R&D and innovation are part of the free trade agreementwe are currently negotiating.

The objective we have in Asia Pacific is to harmonize ourpolicies and reduce the IT or digital gap. That will help ushave new technology and ideas and promote innovationamong all the members of our region.

The economic growth gap has been growing quite

considerably between Europe and the rest of theindustrialized world mostly due to the fact that there is atraditional European socio-economic paradigm that seemsnot to be able to cope anymore; its not working in a worldthat has become much more highly competitive and global.

This is a paradigm based on the assimilation of existingtechnology, a model of mass production relying oneconomies of scale, with more focus on process innovationthan on the creation of new products. There are asubstantial number of small and medium sized enterprisesin many of the European countries, but a certain weakness

essandro Damiani

in the intermediate level and large firms relying on stablemarkets and long-term employment.

The good news is that there is a growing consensus thatknowledge is the answer. Knowledge for Growth is theslogan of European Union efforts to redress the situation. Itrelies on the assumption that research, development,innovation, and higher education are the keys to theanswers Europe needs for those challenges.

According to the European socio-economic model, the threekeys need to be reconciled with sustainable developmentand social welfare. Quality of life and sustainable economicdevelopment can only be considered if innovative scienceand technology is utilized.

Europe needs to concentrate R&D investments, particularlyin the high-tech sectors. Europe is doing relatively well in

traditional areas chemicals, pharmaceuticals,automobile, electricity, and aerospace telecommunications.In comparison with U.S., Japan, and the rest of the world,its doing much less well in the sectors that are moreaffected by technological advance, in areas like biotech,semiconductors, and information technology.

Europe also has to become more attractive for R&Dinvestment. Europe invests far more in R&D in the U.S.than the U.S. invests in Europe. Europe is still a net winnerin the global talent, or more specifically, the researcherspool. But it does much worse than other parts of the world.It does worse than it used to do.

This is largely due to the fact that Europe is now Europe 25,and there used to be a large number of Europeans outsideof the Union who used to increase the numbers of incomingresearchers to the Union. Today they are part of it, and arecounted differently in statistics.

But the flows towards the United States are the most

substantial ones, although from other parts of the worldthere is a growing positive input.

European leaders have adopted a way to address theseweaknesses and challenges. The Lisbon Agenda, a set ofvery ambitious goals that were defined in the year 2000, hasnot lived up to its intentions and expectations. There is nowan effort to revitalize this agenda with researchdevelopment, innovation, and higher education, plus anumber of efforts having to do with making the generalenvironment more favorable to innovation.This revitalization also has to do with setting more realistic


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and intermediate targets, creating a clearer time frame forthose targets, and a framework for collaboration betweenwhat needs to be done at the European level and whatneeds to be done at the national level.

In the area of investment for R&D, the objective is toincrease public funding. Were going to do that substantiallyat the European level with the New Framework Programwhich will double the investment in research at theEuropean level, from five to ten billion a year.

We have a very ambitious goal of reaching 3 percent GDPinvested in R&D. But its already obvious midway throughthe timeframe that this target is not going to be attained.

We also have to improve the climate for knowledge, withscience education playing an important role. We have toincrease the attractiveness of research careers, remove

barriers to researchers mobility, facilitate access forforeign researchers, and develop European centers ofexcellence.

Also important is a better environment for innovation ingeneral, facilitating the transfer of results to products andservices. We seem to suffer from what has become knownas the European paradox, a rather strong substantialcapacity in terms of scientific production. When youmeasure it according to publications, degrees, and PhDs inscience and engineering, we score well, compared to ourmajor international partners and competitors. But then ifyou look at the figures concerning researchers, things lookmuch less positive. Where do all those scientists go if theydont become researchers? Some of them come to theUnited States. Others just choose different paths in theirprofessional lives. So there is definitely an issue ofattractiveness of the system as a whole.

Another very important area where substantial efforts inEurope are being deployed is higher education where we

are trying to make the system more responsive, integrated,and harmonized, going towards a three-level educationsystem, bachelor, masters, and PhD, as it is the case inmost of the world.

The challenges are definitely very big. There is a long way togo. Not all the indicators point towards optimism, but beingaware of the challenge and the global size of it is a step inthe right direction.

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Session 4

National Strategiesfor Educationand Innovation:ComparativePerspectives


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opportunities available for high labor science andtechnology personnel and creates better platforms forindustrial innovation.

As China seeks to enhance its advantage in the globaleconomy, several core issues must be addressed asnational strategy.

They include:

Leaping developmental strategies

Enhancing original innovation capacity to includeproprietary innovation

Improve technology mobilization, realizing optimized

restructuring, and rational distributions of science andtechnology resources

Speed up the path of industrialization

Stimulate the industrialization process with the helpof information technology

Promote international science and technologycooperation and exchanges

Practice a positive human resources strategy to establishopen and mobile human resources systems and increasingthe weight of personnel expenditure in the total R&Dexpenditure

India, even prior to independence, has a fairly sophisticatedhigher education structure. It has some of the highestnumbers in equity in the attainment of education. In 1970,

India was producing about 40,000 engineers. By 1990, itdoubled to about 90,000. And now there are 300,000engineers graduating yearly, which is 50 percent more thanall the engineers being produced in Europe and the U.S.combined.

However, this is just quantity. Quality is something else.Whats also shifted is that while supply was largely drivenby the state early on, now its completely driven by theprivate sector. In 1970, one fifth of all engineers came fromprivate colleges. Now, its 90 percent. Indians are alsoconsuming higher education overseas in increasing

Devesh Kapur


We also need to sustain and enhance internationalcooperation, and America has a responsibility to exerciseleadership in this area so that the collective benefits of ourinvestment are received. We need faster flows of knowledgeand technology around the world. As the competition heatsup in public health and environmental sustainability, forexample, we need to make sure that good publicinvestments are made globally.

1978 was the turning point in China. Thats when Chinaadopted the policy of reform and opening up. Before thereform China was a planned economy. Enterprises,universities, as well as research institutes followed thegovernments plans for everything; for work, for products,even for salaries.

Since then some key steps have been taken, such as theseparation of the government functions from enterprisemanagement and separation of ownership frommanagement so enterprises can operate independently andassume sole responsibility for their profits or losses.

Its necessary to understand why education and innovationare so important in China. So far our economic progresshas come with high imports, high consumption, high growthand low benefit. This cant last long. Education is thefoundation for scientific, technical, and personaladvancement, and is being developed as a higher priority inChina.

China is aware of blazing a new trail to industrialization,featuring high scientific and technological content, goodeconomic returns, lower resource consumption, andlessening environmental pollution. The key is enhancingoriginal innovation capacity.

Of the big pushes occurring in China, the first thing is

reform of the system. Enterprises have gradually becomethe mainstream of technical innovation. They have made up60 percent of the total R&D output in China. Universitiesare encouraged to create new development patterns fornational campuses for science and technology, makingthem a major component of the national technologicalinnovation system.

We are also interested in capacity building. Theestablishment of national key labs, national engineeringcenters, and the return of graduates who trained overseas,have improved research conditions and made more

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Peter SchwartzChairman of the GlobalBusiness Network

What will the Talent Poollook like in 2050?

What I want to talk about is how the world is going changeover the next 50 years and what the implications will be forthe kinds of people who are going be in the talent pool.

It is hard to predict the future. I was born in 1946. I canremember movies and television programs about the futurein the 1950s and they didn't look like what we see at anevent like this one at The Levin Institute today. A televisionshow in 1955 depicting a corporate event 50 years hencewould have had a room of white men with some womenserving coffee. Men were in the dominant position, womenin a subservient position, and very few people of othercolors in any position at all. I graduated from RensselaerPolytechnic Institute in 1968 and there were 12 women inmy class out of more than 500. Today, the president of RPI

is a black woman, Shirley Jackson. The rise of women andsocial diversity is one of the biggest phenomena happeningin America in the last 50 years and just about no onepredicted it. We didnt foresee the changing role of morethan 50% of the population, let alone predict the personalcomputer. The order of magnitude of the changes in thenext 50 years is likely to be staggering as well. If there isone thing I feel confident predicting, it is that you ain't seennothin' yet.

But preparing for different future scenarios is possible andwe should still try to foresee the shape of what is to comedespite the difficulty. I begin in a sense by lookingbackwards at the last century and using those experiencesto create a picture of the next half century. Then I willoutline some of the fundamental advances in science andtechnology that will have a large affect and what theimplications on society and the evolution of work andorganizations are likely to be.

The first half of the 20th century was completely different

from the second half. It was characterized by war andchaos. There was World War I, the war to end all wars,which killed 9 million on the battlefield and disillusionedgenerations. The great influenza epidemic of 1919 followedon its heels and through its troop transports andprobably killed 100 million people worldwide. By the way,we are looking at another serious flu epidemic now. Thenthere was the Great Depression and, of course, World WarII. Tens of millions of people died horribly in the great wars,in civil wars, due to starvation or to totalitarian regimessuch as that of the Soviet Union. There were vast waves of

Keynote Speech ofPeter Schwartz


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But Saul discovered it was the other way around. It wasaccelerating. In looking for an explanation, we discoveredsomething called dark matter out there that is overcominggravity. In fact, 95 percent of the matter and energy in theuniverse is dark. What do we mean by dark? It means wedon't know what it is. That's all it means. We don't know.And if we don't know what 95 percent of the universe is,there might be some slight holes in our other theories aswell. In other words, we're going to have to reinventphysics.

Chemistry is changing too. When I was a college student,chemistry was all about the law of large numbers. You put alarge number of molecules in a pot and heated it. Statisticstold you what would collide with what and what would comeout the other end. You got plastic or oil or whatever it wasyou wanted when you finished. Now we're learning enoughabout molecules, atoms, and sub-atomic particles that we

can actually control them individually.

Last year the most interesting physics experiment of theyear, as picked by the American Physics Society, was whenthe spin of a single electron was measured using a tinycantilever beam. You had to look through a microscope tosee the test apparatus a tiny magnet of just a couplethousand molecules at the tip of this little silicon cantileverbeam. With it, experimenters could identify and measurethe spin of a known electron within a particular atom andthen go back and find that same one and do it again. Wecan control molecules and atoms, and sub-atomic particlesin ways that were simply unimaginable even a decade ago.At this level, chemistry, biology, and physics converge.

This also means we're learning how to make thingsdevices, drugs at the atomic and molecular scale. This ishow nature makes things. Imagine what it was like to builda building compared to growing a redwood tree. A buildingtakes many people, lots of planning, tons of materialshauled from all over the place, built over a year or two.

Nature, on the other hand, has a piece of software calledDNA which, when planted in the right place, has theprogramming to be able to attract other molecules thatbuild more molecules, that form structures, that finallybuild the tree. Nobody was in charge, at least in my theoryof things. The tree built itself. Imagine if we could build ourcars or our clothes or other devices that way. Today wethink about big factories for everything we want, but thatis changing.

Take, for example, publishing and printing. Twenty yearsago if you wanted to get any thing printed, you had to go to


massive change in circumstances and aspirations of1.5 billion people.

In fact, when talking about the future, I want to talk aboutfive countries: China, China, China, China, and India, in thatorder, and then nothing else. No place else exists on theplanet today for foreign direct investment other than China,with a bit of India. It is the center of the world for the next50 years. The Chinese see this as an opportunity, a 500 yearopportunity. They blew the last 500 years. Now they've gotthe next 500 years in front of them, and they don't want toblow it again.

The efforts of The Levin Institute are right at the heart ofwhat is central to success here, and that is the ability ofpeople all over the world to start and launch businessesand create prosperity for their societies. That's how we didit, that's how the Europeans have done it. That's how the

Chinese and Indians are doing it. There is no better avenueto peace than prosperity. They go together.

So enough history lesson and setting the geopoliticalcontext. Lets look at some of the other trends that will havea huge impact on the population over the next 50 yearsoutside of major catastrophic events such as global war orplague.

We are in the early stages of the next great scientificrevolution, a scientific revolution on the order of thebeginning of the 20th century when Einstein and Bohrrevolutionized physics, when we rediscovered Mendel, andDarwinism transformed modern biology. It i s the revolutionof the nano scale. It began in a sense in the 1980s inbiology, transforming that area of study from an empiricalscience to a rational one. Until recently, biology wasbasically taxonomy. We could describe things; we didn'treally know how or why they worked. Now we're learning tounderstand biological systems at the molecular and geneticlevel, in the same way that we understand physical

systems. We are learning to control and manipulate them inthe same way. It is a scientific revolution on the order ofquantum physics and relativity.

A few years ago, my neighbor in Berkeley, Saul Perlmutter,made one of the great discoveries of modern physics. Untilrecently, we believed that the universe was expanding ateither a steady state or a decelerating rate. The reason wasvery simple: all the mass in the universe has gravityattracting all the rest of the mass. This attraction wouldgradually slow down the universes spread.


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Our sense of identity is changing. If is less related to ourcity or country. Think about it as a networked set ofconnections, with gangs as the metaphor. Think about thecolors that gangs wear. There will be the IBM color, theMotorola color, the Toyota color.

Finally what we have are organizations that are really builtaround creativity. If there is anything that we have learned,it is that growth is driven by knowledge, new knowledge.China and India understand this and it is what separatesthem from everybody else. Creative knowledge has thehighest value, whether it's software design, a new biology, anew kind of business service, or whatever.

The workers of tomorrow will have grown up with a verydifferent kind of learning experience that theyll get fromcomputer games. I went to the World Cyber Championshipslast year in San Francisco. The coolest people were a group

of girl gamers who played Medal of Honor Vietnam andcould take on anybody. They were the toughest warriors outthere. What video games give you is the ability to visualizeenormous amounts of data, multi-track, and create virtualeconomies. Eventually those gamers will be celebrated asmuch as football players and Olympic athletes.

So if we think about where we're going to end up after ahalf century of peace and prosperity, what could we sayabout the talent pool? First of all, it will be dominantlyAsian. It will be focused on new knowledge, new services,and be highly innovative. It will be diverse. It will have manydifferent ages, including very, very, very, old age. There willbe a lot of conflict around race and age. The industry will bebuilt around biology and bio-industrial technologies. It willbe more government dominated and it will be aboutstruggling to protect intellectual property. On the otherhand, if we are in a half century where the war on terrorismcontinues, where conflict in Asia comes to fruition, andwhere we see a century characterized more by chaos andwar, this may be the opportunity for Latin America to rise,

as Asia and Europe are absorbed with other things.

Think about the paradigm of the talented person of 2050. Ifwe're in a world of peace and prosperity, it's a Pakistaniwoman who remains very healthy at age 70. She'spracticing Islam and she's consulting professionally on theintegration of global service businesses. She is the workerof 2050. On the other hand, if it's a world of chaos and war,our Pakistani woman has probably been blown up in anuclear blast. Meanwhile, theres a young Latin Americanman who manufactures genetically enhanced memories,


been the case before. If you look at a satellite photo of theglobe at night you see one vast light array. Except for theSahara and the ocean, we are becoming a huge, planet-wide city, with communication and transportationinterconnected. My colleague Stewart Brand refers to thisas a city planet. That is, we are becoming a planetary city.

What is both surprising and interesting about the greatcities of Asia, Europe, and Latin America is how much theyhave in common. There is an enormous amount ofinterconnections and similarity among cities. Clearly, theshopping is similar, the result of globalization but you'realso seeing multiple cultures in many cities. Los Angelesmay be the city of the future. Im from northern Californiaand we have no affection for Los Angeles, but we are notthe future. L.A. is because it is the worlds source ofinformation, digital media, and entertainment. L.A. is also aquilt of many, many ethnic communities Korean,

Japanese, Taiwanese, Iranian, and so on. There's a wholesection of L.A. called Irangeles. There's a large Iranianrock community producing Iranian rock music that getsplayed all over the world. Is it American music? Is itIranian? What is it? Well, it's something else, somethingnew.

It is this intersection of cultures and technology in theurban environment which is creating a new experience forpeople. Their sense of identity is much more complex, morefluid, un-integrated. These communities around L.A. are notintegrated. The city is a patchwork. The right metaphor isnot a stew, perhaps it is a salad. And it is more and moretypical. Shanghai has more in common with L.A. than itdoes with Beijing. Yet.

These global urban archipelagos which let people livewherever they want, do whatever they want, communicateany way they want, is the pattern of the future. If you wantto live in Sydney and work in London, its not a problem, butrather a possibility that changes the reality of where

creative people can be and how they operate anywhere inthe world.

Organizations, groups of people aligned to achieve specificgoals, have been evolving substantially as well. The idea oflocation has changed. There is a changing mix of leadershipwith many more women and non-whites. Politics, medicine,and law will be a women's practice in 20 years' time. Themajority of graduates are now already women. So thewomen are going to be running the world. They're going tobe making the laws and they're going to be curing us all.It's going to be very different as a result.


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69The Evolving Global Talent Pool 69

Session 5

Policy, Politicsand the GlobalTalent Pool


bio-pharmaceuticals, that have probably come from anAmerican design that has been illegally copied.

These are two very different pictures of the worker of 2050.Thats where I want to stop, by suggesting we could end upin very different worlds depending upon what happens inthe global economy, in the global political arena, and whathappens in terms of the context in which people develop.The talent pool will look very different biologically anddemographically in terms of gender and age. It will haveshifted fundamentally around the world in terms of cultureand race. And it will be much greater change than thatwhich we have experienced even in the last 50 years.


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The fate of U.S. workers is no longer a serious factor incorporate decision-making

Optimum talent utilization requires strategies based onthe new realities of a global economy where mobility and

access are increasing

While it is clear that governments around the worldcontinue to be deeply involved in creating, attracting, andretaining talent, the ability of MNCs to identify and accesstalent any time, any place, and any where has creatednew tensions regarding the government-business interface

A countrys security policies can run counter to its businessand commercial needs in an interconnected world, andthere appears to be no easy formula for resolving thedilemma, especially in an era where global terrorismremains a major issue

While improvements are taking place in immigrationpolicy and implementation in the U.S., there will continueto be tradeoffs between security and competitiveness

Speakers

Mobility Issues in an Age of Globalization:Defining the Government Domain

Ron HiraAssistant Professor, Rochester Institute of Technology

The Coming Global Talent Wars: The Next Battleground

Kent HughesDirector Science, Technology, America& the Global Economy, Woodrow Wilson Center

Role of Government in Addressingthe Impact of Talent Globalization

Stewart VerderyAssistant Secretary for Policy (2003-2005)U.S. Department of Homeland Security

Moderator

James LindsayVice President and Director of Studies,Council on Foreign Relations


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extra on education. The other theory says its a zero sumgame where any job that moves overseas is one less job inthe U.S. Neither theory reflects reality.

The real challenge for U.S. technology workers is that thefate of U.S. workers is no longer a serious factor incorporate decision making. This makes it very challenging,because American workers are not only competing head tohead with foreign talent, but theyre robbed of theadvantage theyve had in the past; that of having the latesttools and technologies with which to improve theirproductivity. Now companies are taking those tools andtechnology to the labor, instead of importing it, givingcompanies the flexibility to rebalance or reallocate theirlabor force.

I think the response is for U.S. engineers and technologyworkers to differentiate themselves in some way. But I also

think thats a lot harder than most people realize.

Governments around the world are deeply involved increating, attracting, and attempting to retain talent. Whatrole does the government have in thinking about mobility?There will be a proliferation of carrots in an attempt tomake people feel comfortable. In the past, the U.S. probablyhad a bit of a cultural advantage in that were verywelcoming to people from around the world. Recently I wasin Finland. Its a lovely country, nice people, but a relativelyhomogenous population. The government is interested inattracting Indian and Chinese talent, yet the average Indianscientist might feel a bit more at home in northern Virginiawhere there are restaurants, shopping centers, Hindi TV,and so forth.

When thinking about national security, in the U.S. andelsewhere, people recognize that real technologies walk outthe door of the lab and get on a ship or plane when workers

go home, and that that can be a critical issue. The debategoing on right now is over what Americans call deemedexports. That is, the question of an individual fromoverseas who works on classified material here and thengoes back to China, India, France, or wherever.

What an individual nation ought to do depends on where itis in the course of its own development and what itsstrengths and weaknesses are as of today. In the U.S.context, probably the single biggest thing that the countryshould do is to recognize how much the world really haschanged. If the world isnt flat, you might say its a bit tilted,

Kent Hughes

The issue of human capital and how to view off-shoring andoutsourcing can be looked at from many differentperspectives.

American industry seems to be interested in on-demandaccess to independent highly skilled labor. They want thegreatest flexibility, and dont see citizenship or nationalityas an issue. They view technology training as either theresponsibility of government or the individual. Americanuniversities are pretty much aligned with industrysperspective and are interested in increasing their supply ofgovernment funds. They want access to the worlds best andbrightest to fill their graduate programs and they dont viewforeign students any differently than American ones.

On the other hand, U.S. technology workers are concernedabout protection from what they believe is unfaircompetition. Theyre concerned about visa programs they

view as basically work permits which allow companies tobring in foreign workers, making American workerscompete with foreign workers head to head, not betweenhere and Bangalore, but between here and next door.Theyre concerned about job security and nervous aboutwhether theyre going to get a pay off from the high up frontinvestment costs of their training. Theyre also not surewhat new skills will be in demand, where to go to get thoseskills, and where to get the money to pay for additionaltraining

In terms of whats in the national interest, strong domestictechnology is extremely important from a nationalinnovation system point of view as well as from a militarystandpoint. A lot of subsidies for higher education inscience and engineering have come from the Departmentof Defense. The U.S. wants to develop new markets as wellas good relations with China, India, and other developingmarkets. It wants to capture the best and brightest fromabroad.

Developing countries naturally view off-shoring in adifferent way. Their comparative advantage is high skilled,low cost labor, and they see borders, work permits, andvisas as non tariff barriers to trade. They also want to moveup the ladder of innovation.

There are two competing and contradictory theories toconsider. One, of infinitely expanding opportunities arguesthat jobs that move overseas have little or negative impacton U.S. labor demand because we have expandingopportunities and people who are displaced will quickly getrehired. This theory says all we have to do is spend a little

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short interviews, where biometrics would be collected fromwould-be travelers.

But that created long lines at many posts around the world,especially in China and India. Individuals who had somekind of specialized knowledge, like scientists, who werecoming in from countries that were perceived as high r isk,were sent for specialized reviews where their applicationswere sent back to Washington for interagency review. Thosewere taking way too long by the time our department cameinto being.

The so-called visa mantis program for scientists wastaking almost 3 months to turn around before adetermination was made whether or not this person was athreat to national security. And oftentimes, by the time that3 month period had passed, the conference they were tryingto attend was already over. That was unacceptable and we

were able to improve that. Its now down to about 14 dayswhich is a manageable number as youre planning trips orconferences and that seems to be an acceptable level ofinterference for people who need to do that kind of travel.

The U.S. Visit Program, the kiosks at your ports of entry, isone way. Visitors are now providing fingerprints to bematched against their visas and against watch lists. Wethought this system was going to be a huge problem for thetraveling public, but its been widely accepted. By last countabout 28 million people have gone through it in an averageresponse time of 6 seconds.

The system has a lot of challenges ahead, among themmoving on to land borders and moving on to checkingpeople out of the country. Its a very high risk system thatwill have to be deployed in stages. But its the kind ofsystem the American public insists on. Were a welcomingcountry but we need to understand who is coming and whois going. Its pretty basic stuff, knowing who is coming intoyour home and did they leave. But we didnt have it in place

on 9/11.

China is always a particular issue. The reciprocity schedulewith China is something weve been trying to negotiate formany years and weve only seen minor improvements.Thats why people have to go back and forth over and overagain to get repeat visa privileges.

My point is that security policies can be a major roadblock,or speed bump, in this interconnected world if doneimproperly.

in this case in the direction of China and India. This is amajor transformation and we need to get our thinkingaround it and form strategies based on that new reality toallow for optimum talent mobility.

We need to do a better job at understanding whatdisciplines we will really need in the future and get a bettersense of how and why individual Americans are making thechoices they do. It seems to me that we dont have a goodidea of why people say they want to be an engineer or ascientist or a doctor, or why they may change their mindsas they go through college.

Were going to have to worry about the fact that there areusually a series of steps involved in acquiring an advancedskill. Some of the rungs on the ladder up will no longerexist here as theyre off-shored. We need to think of a wayof substituting. It may be community college. It may be

specialized courses at the undergraduate level. Or it may begrants to multinational companies to provide that kind oftraining.

From a national security view, think about one of thelessons we learned from World War II. Even zealous freetrade advocates of the time realized an exception wasneeded for the watchmaking industry. The skills ofwatchmaking were needed to set the timing of the bombsused in the war. We need to ask then, from a nationalsecurity and a long term growth point of view, what are thewatchmaker skills of today?

I think the single most important thing we can do is createa new sense of excitement around the world about scienceand technology. A high percentage of the scientists andengineers today who are my age were attracted to the fieldby the space program. There was a sense of how excitingscience was, how important it was to the countrys futureand how you were really walking into a very exciting andimportant new frontier.

We recognized early on how potentially damaging oursecurity efforts could be on the flow of talent coming to ourcountry. Prior to 9/11, in most parts of the world, it waspossible to get a visa by mail and that was seen asinappropriate. We want to lock down the individual with hisor her biometrics so we can do watch list checks and givethe public confidence that the person who comes into theU.S. is who they say they are. A system was put in placewith basically a 100 percent requirement for interviews,

ewart Verdery


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The LEVIN Institute The Evolving Global Talent Pool 7776 77The Evolving Global Talent Pool 77The Evolving Global Talent Pool

Session 6

What Strategies haveGlobal CorporationsInstituted to Addressthe Globalization ofthe Talent Pool?

Were making progress, but let me mention two issues onthe table. One is the existing legal requirement, the so-called intending immigrant standard. You have to proveyoure going to leave before we let you in. Over 98 percent ofpeople who arent approved for visas is because they cantmeet that test. Should we keep that test going? Is it areasonable public policy or are there other things we coulddo? Can we check people out? Should companies oruniversities put up bonds to kind of vouch for theseindividuals? Can we be more open on the front end if wehad better checks on the back end?

The second is the perception out there about the UnitedStates. The world is competing hard for individuals, forbusiness, for tourists, and for students. Weve got tokeep up.

The question is what should you, as stakeholders, do? The

first thing is to keep the pressure on. If youre interested inthese issues, engage the government. Engage thepolicymakers because, I can tell you, among policy peoplein Washington right now, while immigration is on theiragenda, its not as high up there as what to do with thesouthern border and the unskilled work flow coming infrom Mexico and Central America. Theres room on theagenda for both these issues, but you need people to pushit with policymakers in Congress and the executive branch..


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While many corporations are actively seeking to leveragethe opportunities created by the more open, facilitativeglobal business and technology environment, the reality isthat they face many difficult challenges in creating a fullyintegrated talent structure that can work effectively across

borders and cultures

At Cisco, corporate activities will be attracted to thoselocations that have the best educated workforce and themost supportive governments

Siemens viewed China as having a very attractive andqualified pool of engineering talent, but it also faced thereality that most job candidates had poor command ofEnglish that constrained effective communication betweenmanagement and employees

ThoughtWorkss emphasized that according to its globalresourcing strategy, 15% of its engineers should not beworking in their home countries. This policy was adoptedbecause the firm wants to build a truly sustainable globalsocial infrastructure and corporate culture

One of Novozymess challenges in moving to China was ashort-term customer focus among many local employeeswhen typically, years of research are needed to produce

results

Speakers

Managing Global R&D Activities: Challenges and Issues

Lance Perry

Vice President, Information Technology, Cisco Systems

Has High-Tech, High Value-Added Outsourcing Worked?

Wolfgang KlebschSenior Vice President, Mobile Devices, Siemens AG

Lessons from Globalizing R&D Activities:ThoughtWorks in India

Roy SinghamPresident, ThoughtWorks

Lessons from Globalizing R&D Activities:Novozymes in China

Yiping YaoDirector of People & Organization,Novozymes China

Moderator

Lionel BarberU.S. Managing Editor, Financial Times


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time jumping right into coding, it made for a much betterexperience.

Here are some statements often made about virtual teams,and their realities.

Statement: Internet is the death of time and space.Reality: You cant change time zones. To work globally,parties must compromise and rotate meeting times.

Statement: Technology isnt a problem.Reality: Most collaboration tools are not easy to use. Data,voice, and video convergence has occurred but in mostspaces, its really in its infancy.

Globalization is about consideration. Were all humanbeings and we cant rely solely on technology. When youmake an effort as part of a larger team, it will pay backhuge dividends and bring the organizations closer together.Effective global task or workflow is really in its infancy.Many times its better to have a large self-contained teamrather than fragmented teams.

Partners are integral to our success. If we were to have theamount of employees we needed to get the job done, itwould be an extreme number and we wouldnt be able togrow and shrink as appropriate. We utilize partners tomanage a lot of our context activity, as well as to mitigateworkload ups and downs. We need to be agile and willingto tap into workforces wherever they may be. Weveimplemented our model based on the geographicdistribution of resources. Were trying to grow our revenuearound the world.

You need local resources in order to work around the world.We assume that you have to have a highly interactiverelationship with your clients. By dispersing around theworld, were able to get an environment conducive todevelopment around the clock.

Ciscos future growth is based on innovation and onmeeting customer needs on a global basis. Jobs will go tothe most educated workforce and the most supportivegovernments. As the business opportunities in differentregions grow, well grow in those regions as well. For anindustry leader like Cisco, the quality of talent and potentialfor innovation have always been the primary drivers interms of hiring.

Outsourcing is key in our business model. We focus Ciscoemployees on our core business activities, and outsourcecontext activities to expand in various regions around theworld.

Cisco was set up a few years back in stovepipe-typeorganizations in very different geographic locationsEurope, the Middle East, and Africa, Asia Pacific and Japan,the U.S. and South America. Each location had its own headof IT, for example, who reported to the global CIO.

About two years ago, we decided to reorganize around aprocess driven organization. In the past, the IT individual satin finance IT, manufacturing IT, etc., and that created a lotof duplication, rather than cross collaboration. Processorganization brought a lot of productivity to the table.

As it relates to infrastructure, we centered our focus on thedata center, network, and productivity tools worldwide aswell as on applications infrastructure. When we moved toprocess organization, we didnt want to lose our localconnection to clients. What had happened was, while webecame more standardized by having functions that workedtogether around the globe, there was a sense of loss withinthe local arena.

So we created the Theater Relationship program, which putin a contact that would work closely with the head of salesor the head of R&D within that theater. That has closed thegap created by globalization.

Due to rapid changes in the adoption of technology, wedont exclusively concentrate on one language or set ofbusiness requirements in our applications. Most peoplethought they needed to have an application specific for theircountry. What we found was that when we focused rightfrom the start and spent more time on planning and less

nce Perry


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The Evolving Global Talent Pool 83The LEVIN Institute 82

percent women, which is high in this high-end industry. Lateron, of course, professional experience became the dominatinghiring criteria when eventually our experienced Chineseengineers were involved.

This number of engineers is just a small portion, just asoftware group, and this was achieved after three years oframping up. Which recruitment channels did we make useof? First of all, the state-owned high school provided staffsearch services, supporting us in managing a job fair forexample in the Beijing exhibition center. They provided us withapplicants to interview. Other channels were university events,the Internet, local print media, and a Siemens-specificemployee referral program, which worked best.

The existence of the R&D location in Beijing demonstratesthat it is possible to establish a substantial high-enddevelopment organization in China. As long as the mobilephone market was booming, establishing this locationdestroyed no high-end positions in Germany. But on the otherhand, new high-end positions werent generated either.Instead, all additional development capacity was exported toBeijing, where the salaries of managers are relatively high,although talented managers with international experience arestill in short supply.

ThoughtWorks builds complex business software. Wevebeen famous the last couple of years for creating atechnique, applying the same concepts as leanmanufacturing to software development. As a result ofcosts and the location of the global labor market, we setup an office in India in 2002. Were about 700 people now.

One of the founding principles of the company is thatculture is the deterministic long-term advantage, not aspecific business model. Because business cycles andbusiness models are so compressed in todays world, ifyou want to have a long-term company, you need to figureout what your sustainable global social infrastructure is.

Fifteen percent of our staff in India are expatriates. Ourpermanent strategy on global resourcing is that 15percent of our engineers should not be working in theirhome country. So we have people from Xian, China in

Roy Singham

Im the head of the global mobile phones R&D organizationwith 1,800 engineers, distributed over eight locations aroundthe world. In 2000, I was asked to establish the Beijinglocation. Why did Siemens decide to found this site in Beijingin 2000? Siemens has been producing mobile phones for 20years. During the 90s, miniaturization and component costreduction generated an unprecedented boom in the mobilecommunications and supplier industry.

In that time, the R&D workforce in Germany grew from only50 engineers to 800 in 1998. However in 1999, the boom inmobile communications depleted the supply of experiencedengineers. That seemed to limit further growth. It was soserious that Siemens decided to acquire the Bosch mobilephone operations with more than 250 R&D engineers and inparallel founded new R&D locations in San Diego and Beijing.

The initial motivation of Siemens to ramp up the Beijingoperation was simply to get access to the local talent market.In the time frame from 2000 to 2005, we took care of thetalent market in China.

For that, Siemens asked nine expatriates to enable theextension of the applicative talent market in Beijing. But in themeantime, new challenges came up like fiercer competition,lower margins, and higher development costs.

This activity was accompanied by a shift of R&D load andcapacity. An additional motivation later on for ramping up theBeijing organization was to save costs by shifting developmentloads to China.

In 2001, I convinced eight specialists from Germany to accepta long term delegation to Beijing as expatriates for at leastthree years. These engineers were high-end, each of themhaving an individual network to the German organization withspecific experience and technical know-how.

Some words about the high end talent pool in Beijing. Due toits multitude of universities, research institutes, and localbranches of Chinese and international high tech companies,the talent pool of Beijing is quite large. However, most of theChinese applicants had problems adequately expressingthemselves in English independent of whether their gradeswere good or bad or whether they came from famousuniversities or not. This preference for applicants with goodcommunication skills eventually resulted in a quota of 50

olfgang Klebsch


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The Evolving Global Talent Pool 85The LEVIN Institute 84

The trouble is, to get innovative you have to understandthe processes that your customers are going through. Butif were writing business software for an inventory control,retail, or dental system, it doesnt have the same context.So the innovation capability is a little bit more difficult. Youstill need human voice to voice and people to peoplecontact. What happens is both sides start working 12 hourdays, and that creates other challenges for both sides.

The other interesting issue is women. There are clearlymore women software engineers in India than the UnitedStates. In the U.S., probably 6 or 7 percent of our hardcore techies are women, whereas in India, its 30 or 40percent. But what happens is that five years into theircareer, women actually start moving away from the superhigh tech stuff.

The exception is China, where 30 to 40 percent of all theCEOs in the high tech space are women. Neither Europe,the United States, nor India has that level of theintegration of women into the workforce, and that givesChina a huge competitive advantage.

Infrastructure in Bangalore is coming to a crunching halt,which is forcing firms to go to other places. But unlessIndia figures out the infrastructure problem, it is going tohurt them over the long run. India does have thecompetitive advantage in English as a language becauseChina is about ten years behind.

It is massively difficult to create teams, even our globalleadership team. Were only 700 people and we have sixcountries and 30, 40 cities; just trying to get all theleaders in one room for two days to create a commonexperience is really difficult.

Some argue that CEOs are heartlessly taking awayAmerican jobs, but it is not just because of access totalent or cost; there is an environment that is beingcreated in the cultures of these countries that actuallygenerates a certain level of integration.

We decided to have our training grounds in India. My viewis that an American who is not willing to go live in India for2 months and understand his or her colleagues in India, isprobably not someone I want in the company.

India, and vice versa. We also decided to take the sametechnologies from the west and bring themsimultaneously into the market in China or India.

There are some challenges, however. I do not think thememorization and the high degree of formality of Indianuniversities prepares Indian students for effectivecommunications in the workplace. Its a really competitivecountry. 300,000 people take the same exam, and they areranked based on that. The way you do well is by massmemorization of details. The lack of liberal arts training ofa lot of Indian students changes the culture of whathappens when we hire them.

Truthfully, India still suffers from a less egalitarian socialstructure than the United States. I mean, the caste systemis still there. There is an implicit deference to authoritywith managers and a passive aggressive behavior of a lotof Indian engineers to expatriates. When youre trying tocreate an open collaboration and culture, these things arestill sitting underneath the covers.

One of the founding principles of the company was that wewant to be known as a network business node and theflattest organization you could possibly build in thistwenty-first century.

The truth is, most Indians manage very differently. Theyreextremely hierarchical. We didnt want that to be part ofthe management style. This was one of our challengesand this is one of the reasons we brought in expatriates.

Now the Indian diaspora is coming to the rescue. Theresa lot of migration back to Bangalore. The diaspora isgrowing for both China too. So there is a net influx backand that has really tremendously helped us.

Now Bangalore, Shanghai and Beijing still have rapidturnover of personnel. Its actually hard to keep the samemanagers and employees. On the other hand, there stillisnt a mix of people.

The ability to mix and match is more complicated. Theresinvention, which is a raw technical event. And then theresinnovation which is the application of that invention to abusiness process or a business problem.


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Corporations have a more integrated expectation of theirpeoples qualities. An advantage we have is that ourcorporate standards for skills and talents are already aglobal standard, closely linked with our global businessstrategy. We have highly skilled people with an increasedglobal mindset for learning and development. The culturehas been evolving to be more conducive for global talent.

A disadvantage is that theres actually a gap betweenbusiness development and people development. Businessbooms and it takes more time to develop the people, andthat creates an imbalance between talent transfer into andoutside of China.

We have an old Chinese saying. It says, when trees aretransplanted, they perish. But when people are mobile,they flourish.

China accounts for over 12 percent of the global revenue ofour company, with about 15 percent annual growth per year.It is very much part of the global R&D strategy.

One benefit of managing global R&D for Novozymes inChina is that China has a very rich biodiversity. This is oneof the main reasons the company set up its R&D center inBeijing. China also has sustained rapid growth. We can alsoinfluence government policy because policy has not beenentirely shaped yet.

Another benefit of putting the R&D Center in China is thatChinese people are very hard working and loyal. And thereare lower costs in China, comparatively speaking.

One of the challenges we face is customers short-termfocus. They want results in two weeks, when typically yearsof research are needed to produce results.

On the human resource level, communication skills are adisadvantage for us, as is the style of the Chinese people.They typically are low-key and non-aggressive. From amanagerial perspective, it takes time to discover thequality of the people and t

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