Looking to the future

 

THE FRIDAY INTERVIEW:Craig Barrett, former chairman of Intel

SURROUNDED BY the library of one of Ireland’s foremost writers, Thomas Moore, in the august chambers of the Royal Irish Academy, Craig Barrett settles down to discuss, technology, education, Ireland and the future. The incongruity of the surroundings is not lost on the former chairman and chief executive of computer-chip giant Intel. The most advanced technology in the room is the coffee machine.

Five months previously, Barrett had lit the touchpaper at a conference in Farmleigh. A high-powered, 180-strong group had convened to discuss Ireland’s economic prospects behind closed doors. Delegates later recalled Barrett’s contribution at the opening session as the highlight of the event.

So what happened? “They foolishly asked me, ‘what do you think?’,” he recalls, “and when you ask an engineer a question like that, you will get the standard engineer’s response.

“What I said is that [having] smart people (good education) is important, smart ideas (investment in research) is important, and then letting smart people get together with smart ideas to do something is the third thing (the environment).

“I said: ‘I am not an expert on your education system but when I look at it, you are not world leading in your education system. In fact, if you look at the people who are interested in mathematics and technology and science, and the performance of the country in that area, it’s not wonderful, so that’s not so good.

“And if you look at your investment in research and development, okay, it’s grown a bit, but it’s still very average by most measures. And the things in the environment that allowed you to be so successful – the low corporate tax rate, the IDA – all of those have been copied by many other people, so what exactly do you have that is unique?.’ I kind of left it at that. I said those are the only three levers you have to pull, going forward.”

In many ways, Barrett’s contribution justified the nature of the event, which made a point of drawing contributions from people outside Ireland who had strong connections here and an understanding of the country.

Barrett is at pains to point out that he is not picking on Ireland. He says it did a wonderful job throughout the 1990s and the early part of this century, growing rapidly and making up lost ground on its peers. However, it had become a classic bubble economy. Many of the same issues confront the US, Germany, Japan and other western economies, he notes. “If you think you are unique in Ireland, you’re crazy.”

The basic issue, as Barrett sees it, is the sudden arrival on the economic scene of Russia, India, southeast Asia, eastern Europe and Latin America. About two centuries of global economic transformation have been compressed into about 10 years. Business reacts quickly to such dramatic change, Barrett says. It follows its customers, and the arrival of hundreds of millions of customers in emerging economies proved a strong draw. “And investment tends to follow business,” he adds.

Government responds much more slowly. And, he concedes, the things necessary to drive change – investment in basic education and research and development (RD) – take time to put in place. “Inevitably, you face a decade of a very challenging environment.”

He believes that “the only ways you compete are on the new industries, the value-add jobs where intelligence and training and skills are important”, or jobs that are very capital intensive – like computer-chip manufacture – because labour cost is not so much of an issue.

Competing with the commitment made by the likes of the Chinese to create centres of excellence along the lines of Stanford University or Massachusetts Institute of Technology (MIT) is tough, particularly given the shorttermism inherent in western democratic electoral cycles, he maintains. But he says investment in education, especially in maths and science, is critical.

Barrett points to the sectors named as growth prospects in a recent EU study: nanotechnology, biotech, alternative energy, nano and microelectronics, photonics and new materials. What they share is a basis in science and technology. And while, as Barrett points out, Ireland ranks strongly in terms of cultural and liberal arts, it does not fare nearly as well when it comes to maths and science subjects. That needs to change, he believes.

“There are things you can do in the short term in the areas of education and investment in research and development, but you have to be very aggressive in what you do . . .because the environment has changed so dramatically,” he says. “The game plans we all had 10 years ago are not the game plans for success today.”

Barrett gives the clear impression that he believes the traditional economic powers in the West, including Ireland, find it difficult to embrace such dramatic change. A case in point is universities. He believes passionately that universities must work more closely with industry. “Ireland has two universities in the top 100 worldwide . . . but frankly, neither of them has extended expertise as a wealth creation centre for the economy,” he says.

“It can be done but it requires a change of attitude among faculty and also among university administrators, and probably political air cover to make it happen.”

Increasing Ireland’s investment in RD to close to 3 per cent from its current level of roughly half that – in line with commitments made a decade ago – would help, he argues, and points to Stanford and MIT to show that a more commercial approach does not necessarily mean sacrificing academic excellence.

“Ireland and Europe have the same disease,” Barrett says. “In the US, we can find $800 billion for bank rescues or stimulus packages but ask for one more dollar for science and they cannot do it.”

His other focus is on creating an entrepreneurial culture, an environment where risk-taking is appreciated. Ireland, he says, has work to do, in particular amending bankruptcy laws that punish failure harshly.

The future, says Barrett, is not one where foreign direct investment will drive growth. Instead, our future prosperity rests on small, indigenous companies run by smart people with smart ideas creating value-add jobs and with a focus on exports (“you [effectively] have no internal economy”, he says in an aside). And that means creating an environment that encourages people to take a chance, to spin their company out from the safe confines of a university research programme.

“You need to grow your economy from within and that will come from start-ups and risk-takers. Ireland struggles in this area and that is a societal issue,” he says.

Recently, Barrett has taken on a leading role as chairman of the Irish Technology Leadership Group, a collection of Silicon Valley executives with Irish backgrounds keen to help innovative companies from Ireland break into the US market. So how important does he consider the diaspora?

“You can use those people of Irish roots. My grandmother came from Ireland but that doesn’t mean I am going to send a cheque back to Ireland,” he says. “But if Ireland has something to offer and let’s say what Ireland is offering is in a tie with what someone else is offering, then your diaspora might give you a little bit of advantage. It is a resource and I’m all for using that resource, but only if you have something that people want in that market.”

Finally, as Ireland battles recession, have we become too negative overall? “I think frankly you are not tough enough on yourselves.”

On The Record

Name: Craig Barrett

Age: 70

Position: Retired last May from the post of chairman at semiconductor group Intel, for whom he had worked since 1974. Credited with the decision to bring Intel to Ireland in 1989.

He served as chief executive of Intel from 1998 to 2005.

Family: Married to Barbara, an astronaut who served as US ambassador to Finland between 2008 and 2009. They have two adult children.

Something you might expect: As an engineer and former Stanford University lecturer, he is passionate about education and the need to commit more resources to the teaching of maths and the sciences.

Something that might surprise:  Barrett loves nothing better than to spend his time fly-fishing in remote parts of the world, or at his Montana ranch.