High Tech Awards Keynote Address

High Tech Awards Keynote Address

George Newstrom

Greater Washington Region High Tech Awards Banquet

May 14, 1997


Thank you. It's my pleasure to join you this evening. I was asked to keep this session short, light but insightful. Therefore, the title of my presentation to you this evening is "The Empirical Analysis of the Convergence of Technology Linked to Macro Economic Theory Relative to the Fibinachi Principle and the Parabolic Cause and Effect Relationships of Unknown Multi-Disciplinary Factors." My presentation is over 20 pages, type-written, single-spaced----but I offer to take one page of notes out of my presentation for every standing ovation that I get this evening.

I quote:

"A new century is at hand and a fast-spreading technology promises to change society forever. It will let people live and work wherever they please, create dynamic new communities linked by electronics, improve the lot of the poor and reinvent government ?unless its use for illicit purposes sparks a crackdown."

These words may sound fairly topical today?..but they aren't. In fact, this was written a century ago about the telephone.

Like the quote about the telephone, much has been said about the Washington area, or as John Tydings and the Washington Board of Trade likes to call us:

"The State of the Potomac." This region of the world is in a very unique and enviable position - yes, the neighborhood where we live, work, and play is centered by the most well-known and important city in the world - - Washington. And please notice that I did not say D.C., for the rest of the world knows this city by ONLY one name, Washington. Only those of us that live here use the two letters D.C. and many times make it sound like we have just uttered a four letter word.

My friends and colleagues, this region IS special and unique. Our great strength lies much as does the strength of a wagon wheel, whose rim (like the surrounding areas of Washington) touches the ground and does the work, whose spokes lend strength and geometry, but whose center makes it all work together and moves it forward gracefully. I am delighted that Washington Technology, KPMG Peat Marwick, the High Technology Council of Maryland and the Northern Virginia Technology Council are sponsoring this event to showcase the collaborative efforts of many who understand the metaphor of the wheel and want this region to grow, prosper and compete for a leadership position in a new and tremendously competitive challenge --- the challenge of global economic visibility and leadership.

Let me talk about something of little controversy and the subject of many speeches at dinners like this - the notion of CHANGE - but let me approach it from a slightly different angle. While change has always been a part of our lives, change today is happening at a revolutionary speed. And not just here in the U.S. One of the greatest areas of change and one which will have the most significant impact on our future is change in the global marketplace.

I'd like to take a few minutes to talk about three of the most pervasive reasons for global change. While what I am about to say may sound esoteric, it does reverberate into the future of our lives, our region, and our companies. First, is the change in the balance of global power. In the past, when we talked about power we referred to military power. Military strength was visible and could be dealt with in a direct and calculated manner based on historical facts. But today when we talk about power, it resides in economic power. The type of economic power of tomorrow that I am talking about has no roots in history, therefore we are creating our response to new opportunities, new markets, and new consumers as we go.

Let me give you a few examples of this shift in economic power. In 1993, the Gross Domestic Product was $6.0T for the US/NAFTA, $6.5T for Europe and $5.4T for Asia. However, the growth rates into the next decade are projected to be 2.5% for US, 2.3% Europe and 5.4% for Asia.

Additionally, as we enter the year 2000, it's estimated that over 50% of the 6.2 billion people in the world will be from Asian countries and 500 million Asians will have "middle class" status, in Western terms. That's equal to the population of the U.S. and Western Europe combined. Further, by the year 2010, this middle class could have spending power of $8-10 trillion ? which is more than 1.5 times that of today's U.S. economy.

This change, which is inevitable, is happening in numbers and in a time frame never before imagined. Our country, our companies, and our educational systems, just to name a few, will all be challenged to adapt to this change.


The second factor behind global market change is the convergence of communications and technology in our lives. This is not strictly a business issue, but it affects each one of us and the way we work, shop, play, learn, communicate, receive health care, almost every aspect of our lives. No, I take that back - it will affect EVERY aspect of our lives.

Raymond Smith, Chairman of Bell Atlantic, said a few years ago, "Before the communications industry is through, your computer will speak, your TV will listen and your telephone will show you pictures." Or as a cartoon I saw recently put it," Answer the television, honey, I'm watching the phone."

There is plenty of talk these days about the "information highway." However, I agree with Bill Gates that the notion of a highway may be a terrible misnomer. Unlike our highway systems, which allowed trade, commerce, individual transportation and, indeed, brought this nation together - the information highway of the future does not transport you THERE. The beauty and magic of it is that it brings products, services and information HERE. And, HERE is wherever you are, whenever you need it, in whatever format you want it. This capability is awesome but I would argue that unlike a highway system, it isn't the infrastructure-----the hardware, software, or networks ----that will drive the global changes. It is the tremendous ramifications on our political, social, structural and economic areas of life.

I am fairly certain that the old measures of national success based on GNP/GDP and trade balances will give way to a notion of global/ regional success. The continent of Europe is in the throes of dealing precisely with this challenge. It is a quintessential example of a change in thinking that must occur for that part of the world to attempt to regain the global stature that they once held. If this notion is to be realized, the traditional metrics associated with national success, GNP and GDP, must give way to a metric that I call GGP - Gross Global Product ? across nations, triads, social, political and national boundaries.

Let me give you a simple example of this notion: Think about an automobile, where the parts are manufactured in multiple countries around the world, assembled in one or more nations, and distributed and sold across the globe. How can the traditional measurement of GDP be attributed to this cross-boundary commerce?

That really was a simple 'manufacturing' example - - Try this one in a more service oriented sector: A surgeon in Oslo, Sweden assists real time/live in an operation on a Japanese citizen in a hospital in Sidney, Australia. This model deals with the "business" measurements I described in the manufacturing example, but it also deals with the social and political issues around the national laws, regulations and licenses of the individual and institutions involved.

The third reason for change in the global market is a revolution in the basic foundation of what you and I learned in Business Marketing 101A. We learned to subscribe to the PUSH model of marketing where we researched a potential market; developed products to fit that market; packaged the products for high visibility sales; worked diligently to determine market saturation and price point strategies; created challenging and complex distribution channels that rivaled Einstein's Theory of Relativity; and used complex media plans to drive those products and services to every potential customer. Certainly, many products are still sold this way and do very well - - ever heard of the Nike Swoosh?

Well, with the creation of the Internet ? that model of marketing may be passe in the near future. The PUSH model of marketing is being replaced by the consumer PULLING products and services through channels of distribution that they created in a virtual environment from anywhere in the world, 24 hours-a-day, 7 days-a-week. As we all know, we can now shop on-line for almost anything (and the list grows by the hour), we can do our banking and pay our bills over the phone, television and the Internet, and we can do 100% of our vacation travel planning while relaxing at home. By the way, all done at a lower cost to you and I. The phenomenon I just described will create the most pivotal change in consumer buying patterns since the invention of the credit card by the banking industry.

This new global marketplace should inspire and encourage us. As a nation, and specifically for us in the Greater Washington region, our challenge is to be strategically agile, creative and entrepreneurial in spirit - actually, Mario Marino has even coined a new term for the intersection of the entrepreneurial spirit and the new networked society called the 'netpreneurial' spirit.

We have plenty of entrepreneurs here in the Netplex. We are part of the fastest growing technology region in the U.S., outpacing the employment growth in the Silicon Valley and Boston's 128 corridor.

  • There are over 2,300 technology firms in the region employing more than 260,000, giving us the second highest concentration of technology firms in the country.
  • These firms generated $21 billion in direct revenue (in 1994), 16% of the economy's total revenue.
  • More than half of the companies that control the $15 billion global satellite communications industry are located in the area.
  • More than half of all daily international Internet traffic moves through the greater Washington region and four of the largest Internet access and content providers are located here (AOL, PSI Net, UUnet, and Network MCI business).
  • According to the Washington Post, a record tide of investment dollars flowed to the Washington area in 1996 with technology companies at the top of the list.


Clearly, we are seeing more and more technology companies moving into the area and we are emerging as a powerful high tech region. We can be proud of this, however, dozens of regions across the U.S. and around the world are ready to compete with us in this new global economy. In fact, while we may believe we are evolving as global leaders in technology, if you asked someone in Kuala Lumpur, Taipei, or Stockholm to name a technology center of the world, I don't think this area would be their first, second, or even third choice - actually, there is almost a 100% chance that, currently, they wouldn't even think of us at all.

The Greater Washington area?all of us here tonight?must take action to secure our leadership position for the future. And, this can only be accomplished by working together to create opportunities for our region and our industry.

Let me suggest two things that are being done or that we can do to create opportunities for us:

First, there's a major event next year which will provide an excellent global forum for us. The World Congress of Information Technology will be hosted by Dr. Alan Merten and held at George Mason University in Northern Virginia in June of 1998. This event was bid and secured for the United States by the proactive and visionary efforts of the Fairfax County's Economic Development Agency in partnership with the Information Technology Association of America (ITAA).

It will bring an audience of over 1,500 IT industry leaders?.. chairmen, presidents, CEOs, COOs, CIOs and senior level executives from more than 50 countries to our region. To put this event into perspective, this is the OLYMPICS of the technology industry. This prestigious event is one of the greatest examples of regional cooperation by the public and private sectors that I am personally aware of. The public sector, led by the FC/FCEDA, the State of Virginia, the CIT, and Loudoun County has been joined by the Washington Board of Trade and companies like BTG, DynCorp, AT &T, Media General Cable, EDS, and others to plan and deliver the most spectacular World Congress of Information Technology ever held.

Tonight, I am pleased to announce that we are in the final stages of discussions with Dyan Brasington and the High Technology Council of Maryland who will shortly join the World Congress at the Platinum Level (the highest level possible) and who will join the Board of Directors of the World Congress to help plan and deliver this event. This is a tremendous opportunity for us to join together to showcase our regional cooperation and thought leadership.

Second, on a more strategic level, we can make a difference by investing in the ONLY stock that has a guaranteed ROI in the future (yes, here comes a stock tip from Newstrom). The stock that I'm referring to, of course, is our children.

Specifically, the need to reach out to both teachers and students, from K-LIFE, with a vision, focus, and investment of time, money and energy. I happen to be a zealot for the fields of math, science and technology. WHY? Nationwide, the U.S. Department of Labor projects a 90% growth in jobs for systems analysts and computer engineers between 1995-2005. However, a recent ITAA survey indicated 190,000 IT job vacancies at U.S. companies currently.

What may be even more alarming is a survey completed last year by the Northern Virginia Technology Council that found 30% of the students at major Virginia colleges and universities graduated with degrees in humanities?..and this trend is on the upswing. The study went on to indicate that only 9% of the students graduated with degrees in science and technology and this percentage is on a downswing. While I may personally have the need for a psychologist, my company is hiring graduates primarily in the fields of math, science and technology. In fact, it is estimated that we may have a shortage of as many as 10,000 - 15,000 technology workers in this region today.

This should concern us, because it not only costs our businesses millions of dollars in lost revenues but the impact reverberates into our local economy with the lack of employees that we need to compete in the future and a substantial reduction in one of the greatest discriminators that this region is known for --- our highly educated and skilled workforce. It is critical that we double our focus on the education of our children if only for beady-eyed self interest to keep the Social Security system solvent until you aren't around anymore and therefore don't need it any longer!

So what should all this mean to you? What's my point?

The future is not for us to inherit - it is for us to work for and to earn. We truly have some very special and unique advantages in this region. But we must capitalize and leverage the advantages. Our individual, corporate and regional successes are very much interdependent. The proverb that 'the rising tide raises all ships' has never been more true than today and never more true than in this region.

With the cooperative spirit embraced by this event and with the vision and the leadership of the people in this room, I am confident that we have every ability to compete in the new and exciting world ahead of us. I look forward to the rest of the evening and to work collaboratively with you to make this region the most desirable place on the globe to live, work, play and prosper.

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