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Tuesday, August 16, 2005

KM Asia and the US - What Does the Future Hold?


Thread from the KM.gov listserv:


-----Original Message-----
From: KMWG [mailto:KM-List@listserv.gsa.gov]On Behalf Of Hillman, Michael
Sent: Tuesday, August 16, 2005 9:29 AM
To: KM-LIST@listserv.gsa.gov
Subject: Re: Study Says US Could Lose High-Tech Edge Might I make a humble suggestion?


John:

Might I make a humble suggestion?

As you noted, this has, and continues to be an interesting discussion. However because its being done on a list serve, the knowledge that’s being shared is only available to those on the list server today; there is no real ‘capturing’ of it for future members.

I for one have unfortunately deleted most of the e-mails on the subject after reading them … now I wish I hadn’t.

However, had the exchange taken place in a discussion forum, it would have been:
1) captured for future use by members who don’t know we exist today; 2) not barraged members who are not interested in it with e-mails, and 3) and most importantly, might have served as a vehicle for the participant to work virtually on a common path forward on KM … and God only knows spurred a host of sideline discussions, all of which would have enriched the Federal KM community!!

That said, I suggest at next week’s planning meeting on the future of the KMWG we discuss adding a discussion forum, as well as collaborative tools to the KMWG web site … and in doing so, make it easer to capture the wealth of KM knowledge our members possess.

Your thoughts?

Mike Hillman


-----Original Message-----
From: KMWG [mailto:KM-List@listserv.gsa.gov]On Behalf Of Nerida Hart
Sent: Monday, August 15, 2005 8:40 PM
To: KM-LIST@listserv.gsa.gov
Subject: Re: Study Says US Could Lose High-Tech Edge


This has been a very interesting discussion and I would like to tell a
personal story about KM issues and outsourcing to India which I experienced
earlier this year.

At the Information Online conference 2005 (held in Sydney in February this
year) there was a guest speaker from India (I think he was from KPMG - but
don't quote me) talking about the benefits of outsourcing call centres to
India. He highlighted the benefits of lower costs, 24/7 service, higher
level of education from the workers etc.

However, when I pressed him about the cultural differences and knowledge
issues he admitted there were a fair number of problems in this arena.
What it came down to was that India was more than capable of undertaking
pure processing (not taking on complex issues which may involve societal
and cultural issues). I was particularly interested from the point of view
of the social welfare system in Australia which has very large call
centres. However, the types of questions from the clients would require a
strong undertanding of Australian culture.

I can see the benefits of outsourcing processes to India or China, but I do
think each country has particular cutural differences (even those that
exist between the USA and Australia would be highlighted in this area)
which cannot be satisfied by using foreignsources of labour.

I think it is up to those of us in the knowledge arena to highlight to
those we can influence in government that this is not just about the
tangible (money) issues and that some things (the intangibles) can bring
greater benefits if only we were taking notice of the long term impact
rather than just the costs.

regards

Nerida Hart (Deputy Convenor, actKM)
Director
Knowledge & Information Services
Dept of Family & Community Services
Box 7788
Canberra Mail Centre ACT 2610
(02) 6244 6430



-----Original Message-----
From: KMWG [mailto:KM-List@listserv.gsa.gov]On Behalf Of Hsu, Francis X
Sent: Monday, August 15, 2005 5:20 PM
To: KM-LIST@listserv.gsa.gov
Subject: Re: Study Says US Could Lose High-Tech Edge


John,

I am smiling because I wrote MM offline on just this issue.

To me, these discussions are at the heart of KM. They help us get ahead of the steep learning curve of KM. If this is so easy, why bother? Why think about it? What’s the purpose of having ‘virtual communities’ if not to exchange ideas?

What happened on 2001-09-11? We’ve since learned that many individuals, in the US Gov’t, tried warning us that something dire was going to happen. Did anyone listen and take action?

Now, we are suppose to invest billions and billions of taxpayers dollars in KM-IT without bothering to think through what this is? Or means? Vendors will sell you anything.

They don’t’ really care whether it’s effective or not. The Manhattan Project didn’t produce the A-bomb because they decided to stop thinking about what they were doing. They had plenty of discussions and arguments too. That’s what using one’s mind in a democratic society does.

KM is the Manhattan Project of the Information Age. Open discussions will help identify the good, the bad and ugly parts of KM. If anyone knows a better way to do this, PLEASE, let us all know.

Francis Hsu
Dept of State
IRM/OPS/SIO/API/Data Management
703-875-6089

This message is UN-CLASSIFIED per EO 12958.

--------------------------------------------------------------------------------

***************************
-----Original Message-----
From: KMWG [mailto:KM-List@listserv.gsa.gov]On Behalf Of John Andre
Sent: Monday, August 15, 2005 4:34 PM
To: KM-LIST@listserv.gsa.gov
Subject: Re: Study Says US Could Lose High-Tech Edge


Hey, folks.

While I've been interestedly watching this thread develop on the listserv, I have been receiving pointed messages questioning the direct relevance to KM. In fact, I've had about ten people drop off because of the impression of being overloaded with what appears to be an important but peripheral topic.

If you will forgive me, let me ask that those interested in continuing the discussion, or lurking as I have been, on the subject of U.S. IT competitiveness to communicate directly with Mr. Montgomery. I don't wish to be a traffic cop because this is more activity than I've seen in some months, and it's a topic of burgeoning interest to agency CIOs.

Nevertheless, I am forced into a position of doing so.

Very respectfully to all sides,
John

***************************
If you wish to unsubscribe from the KM listserv, please contact john.andre@gsa.gov.

***************************

-----Original Message-----
From: KMWG [mailto:KM-List@listserv.gsa.gov]On Behalf Of Hsu, Francis X
Sent: Monday, August 15, 2005 12:40 PM
To: KM-LIST@listserv.gsa.gov
Subject: Re: Study Says US Could Lose High-Tech Edge


Mark,

Your responses are so detailed, it’s difficult to formulate a reply.

I am researching for a book on information uses. So naturally this would overlap, sometimes a lot with some of your points.

1) Your ‘years of screaming’ underscores what we all already know: actions speak louder than information. Osama bin Laden declared war on America in 1996 (Words, information). It took 2001-09-11 as action, to get the attention of American government and more to the point, American people.

2) Intelligence information is highly overrated. Especially as it relates to business, finance and investments. Even when the info is related to national security issues, such terrorism, it gets noticed ‘after the fact.’ Note how these former officials, George Tenet (CIA), Richard Clarke (WH-CT) and John O’Neill (FBI) for years warned of Al Qaeda activities. You’ve heard of the FBI’s Phoenix memo. An agent of the FBI in Phoenix wrote a memo (prior to 9-11) to draw attention of his suspicion why so many Middle Eastern men seem to be taking flying lessons. HQ and the Intel Community did not follow up.

3) Your point on VC financing is very cogent. Until now, America has had this to ourselves. Now that both brain-power and financing is sloshing around the world, there is real competition of what and how.

4) Maybe someone could focus more on the transformation process of getting the inputs into outcomes.

Francis

-----Original Message-----
From: KMWG [mailto:KM-List@listserv.gsa.gov]On Behalf Of Mark Montgomery
Sent: Monday, August 15, 2005 4:07 PM
To: KM-LIST@listserv.gsa.gov
Subject: Re: Study Says US Could Lose High-Tech Edge


One person asked the expected question- "What relevancy does this have to
KM?" (U.S. competitiveness)

I answered privately, but the short answer is that what I have seen globally
in knowledge systems all around the world have been investments (reason for
being) due primarily to their country or entity becoming more competitive,
largely in response to the U.S. in the past. Of course one needs some kind
of knowledge system in place before one understands the need, but if any
country, including the U.S., is not competitive on the global stage- then
its ability to provide services will be greatly impaired. So competitiveness
is at the core of priorities for most countries and entities who are
investing in knowledge systems, and justifiably so. The fact that
globalization and competitiveness isn't a popular topic in the U.S. does not
change its importance- more of a symptom of a culture that has not
experienced competition, and a scary symptom at that.

Bob- your query highlights the reason why I continued with GWIN until I was
almost personally bankrupt. One of very few global networks, and from my
perch by far the most influential at the time given the membership- most
countries had senior membership as did almost all major companies and think
tanks- it would have been very easy at the time to choose one of the dozens
of communities, or via the social networking features, to hook you up with
the appropriate people- directly or indirectly. Today I would likely go
through my friends at T-Bird U who have a major campus in China or one of my
peers in Asia.

A global knowledge network that is well designed and free from conflicting
interests can be a powerful tool for all concerned, but one very difficult
to fund. We did it with our personal retirement funds.

Let me know off list if I can help. Best, Mark


-----Original Message-----
From: KMWG [mailto:KM-List@listserv.gsa.gov]On Behalf Of Bob Turner
Sent: Monday, August 15, 2005 3:07 PM
To: KM-LIST@listserv.gsa.gov
Subject: Re: Study Says US Could Lose High-Tech Edge


Have enjoy your insights Mark, especially about China and India. I think
my next read will be Kenichi Ohmae's "The Next Global Stage". Last year I
went to Beijing and enjoyed it so much I'm returning in October. I'm
thinking it could be interested to make a connection there with Chinese
regarding knowledge management, either in the government or private sector.
Wonder how I would do that? By the way, a recent Ohmae article is: here








Mark Montgomery
To KM-LIST@listserv.gsa.gov
Sent by: KMWG
cc
Subject Re: [KMWG] Study Says US Could lose High-Tech

08/15/2005 03:34 PM


We could probably go on for weeks and justifiably so just on China alone.
No disagreement here- my personal ethics have too high a bar for China, but
it's not only quickly becoming the largest market in the world, but more
importantly for decision makers- the majority of economic expansion is
expected to come from China, India, and to a lessor extent other emerging
markets- Brazil, Eastern Europe, etc. In most of industry leader circles
today, the belief is that if you do not find a way to engage in China and
India you will very likely lose your global leadership position in the near
future. Now consider that we have U.S. taxpayer supported programs for
investment in emerging markets, but not for our own states, some of which
are at a disadvantage economically. That's probably not one of the mistakes
China is making right now, although guessing.... Why shouldn't investors be
given the same option for dying towns in the Midwest with low costs and
vast emptiness?

We are having a very similar conversation about China today that Europe did
about the U.S. in the industrial revolution. The primary differences I see
is that China and much of Asia are already over populated rather than a
vast empty space that the U.S. was- so we won't see the mass migration that
we saw to the U.S. from Europe- the jobs won't go to the population in the
west, but some of the ROI will. That's a big difference.

And China's situation, culture, and systems are substantially different
than anything we've encountered before. It's a very complex situation, but
no question that currently China and India are perceived to be where the
future resides. I attended a global private equity conference a few months
ago - the emerging markets portion was amazing- the general partners in PE
firms were discussing and sharing experiences. Most that were invited to
speak are doing extremely well compared to the rest of the world due to
growth, but they are dealing with issues like oligarchs, corruption,
favoritism/nepotism, fraud, mobile and un-enforced laws, and enormous
language and cultural barriers.

However, they do have some ethical investors on the ground, the costs of
doing business well are ridiculously low in comparison to the west (anyone
who doesn't believe that costs matter are living in denial), their
technology is much better than most in the west are aware of- the majority
of large companies in the west now have R&D centers on the ground, and
their governments and local companies favor local companies when buying.
So in the world of competition, they are simply more competitive. Will they
have a down cycle? Of course, and the banking system will take a hit sooner
or later, but valuations are rising so fast across such a vast population
that it covers an enormous range of errors. It is in many ways like the
U.S. once was in terms of economics, but very different in other ways. It's
not a melting pot, nor a democracy- a hybrid of communism and capitalism.

One of my peers is a US national who moved over there a decade ago, who I
think is among the smartest in private equity over there, said that he
doesn't think that anyone can stop the beast now- not their own government,
not the U.S. - no one. Similar to the early wild west in the U.S. I
suppose- where everyone else's rules and requirements were ignored but
their own, and their customers. Another peer in DFJ I know well just made a
billion dollars on the search engine IPO in China.

As is always the case in capitalism- winners and losers alike are in good
company. But I don't agree with my friends in multinationals who suggest
that this trend is good for the U.S., unless of course the individual in
question owns equity in the winners. It simply is, so we all have to deal
with it whether we like it or not, and we all are feeling the affects,
whether we recognize the cause or not. I for one would just like an equal
playing field, but we don't have it in most of the states today. .02 - Mark

----- Original Message -----
From: Alex Pavlak
To: KM-LIST@listserv.gsa.gov
Sent: Monday, August 15, 2005 11:08 AM
Subject: Re: Study Says US Could Lose High-Tech Edge

Mark,

I was prompted to jump in by a comment you made about Venture Capitalism
in China. My visceral reaction was that the VCs would loose their shirt
because China does not have the legal infrastructure to support something
as sophisticated as venture investing. VC is safer in India than in China.
But on reflection China VC could be very interesting.

VCs need a China brand, a method of investing that relies less on law than
on personal contacts and family. China practices a primitive form of
capitalism, not quite robber baron but close. A VC who is sensitive to the
culture might do well.

Alex

----- Original Message -----
From: Mark Montgomery
To: KM-LIST@listserv.gsa.gov
Sent: Monday, August 15, 2005 11:49 AM
Subject: Re: Study Says US Could Lose High-Tech Edge

Hi Francis,

I hear you- we can only share published reports- most valuable information
on this topic is protected by confidentiality agreements. The best public
work I see on the topic is from the Milken Institute
www.milkeninstitute.org , but good global information is still spotty.
Milken has much less invested in a particular outcome, have sharp staff,
and their results more often jive with reality.

The primary message is that after years of screaming by many of us who do
see the results, the media is finally taking notice, which will eventually
presumably have some impact on voters, which will then eventually
hopefully have some impact on policy makers.

It's not accidental that often has been the case that a venture capitalist
is chosen as chair or co-chair of the presidential advisory council on
technology http://www.ostp.gov/. One of the past chairs is one of my
closest advisors and I have communicated often on this topic with many
past members. Currently Floyd Kvamme of Kleiner Perkins is co chair. Colin
Powell recently joined them as an advisor. Professors have an excellent
view on emerging research- VCs are the source for emerging companies and
where that research is being commercialized. I have no idea how good the
top secret intel is on this or what the President and Congress see, just
what we see.

I would agree that it's foolhardy to count the number of degrees, R&D
dollars, or any number of other measures commonly found in economic
development circles, of whom I am constantly spending time with in an
attempt to convince them that their learning on the topic is flawed and
needs to be replaced. The important issues are overcoming very specific
barriers and creating a culture conducive to building tech companies.
Everything else is noise.

The quality of a market can indeed be quantified, but the economic
development community methodology is usually flawed relating to
entrepreneurship, and even the foundations specializing in the area are
often culturally biased. I am involved in preparing a conference in AZ
currently on "AZ Competitiveness", but the sponsors all have conflicts
that prevent them politically from seeking/telling the truth -universities
want more funding regardless, economic developers and community planners
usually want more control and higher budgets, and trade associations of
course want to protect the interests of their members, which are often
multinationals, not start-ups.

So consequently the conferences themselves (generally speaking) get off in
the wrong direction, invite the wrong people, and poor information is
often delivered regarding the topic of entrepreneurship and
competitiveness. The bulk of the information from the government is simply
not credible on this topic (sorry folks but it's true- the SBA Office of
Advocacy is the only credible source I've found consistently over 20+
years now).

Sadly, in the past decade in large part due to this medium, much of the
world has listened to the real thought leaders in the trenches, while much
of the U.S. has not. It's not that the U.S. has done anything differently
in the past few years- we haven't, but that's the problem- we need reform
while much of the rest of the world is quickly improving their
infrastructure relating to building competitive technology based companies
that can compete globally- India certainly being perhaps the best example
in IT, but far from the only one. And the U.S. has really not done
anything differently at all, except a bit more funding using the same
distribution channels- namely in the NIH and DoD, and that will have some
positive impact, but the percentage of tech transfer in our research is
simply terrible.

For example, our SBIR program and SBIC (SBA venture capital program) are
not at all competitive in many very specific ways- they are relics. The
only reason they worked so well in the past is because so few in the world
were making any serious attempt at all. That is no longer the case. It's
not politically correct to take this view, but IMO it shouldn't be
politically correct to not tell the truth as one sees it.

We see much the same in SIGs within science. The institutionalization of
entrepreneurship in recent years, particularly the economic development
and political influence in the U.S., as well as the cultures within
institutions, have really changed the entrepreneurial environment in the
U.S. to the negative- again relative to the rest of the world. The valley
of the death in the U.S. (viability gap in building tech businesses), as
was recently shared with Congress by Floyd Kvamme ( here ) is very real, and in
my view is expanding in the U.S. while shrinking in much of the world.
That is viewed as a good thing by some for world peace, but is also very
difficult for anyone to influence, much less control, other than each
country themselves in reducing barriers.

I don't see Bangalore as a SV, but more an eastern branch of SV- a lot of
VC is pouring into India just within the past few months. China is
attempting not just to replicate and replace SV, but rather has eyes on
surpassing the entire U.S. economically- and most believe they will
succeed eventually. The EU has serious barriers like the U.S. on the cost
side, but Ireland is the best example in the world on what can be done in
a short period of time for a mature country. Recent perspective includes a
private conversation between myself and a SV VC firm who said that when
they expand, they will do so in China, not in SV.

There can be no debate about a couple of issues. Quality of human capital
is the key and the trend has been somewhat reversed in a short period of
time- expats are heading home in large numbers and/or assisting from the
U.S., and much fewer thought leaders are finding it necessary to come to
the U.S. And unlike just 5-10 years ago, it's no longer necessary to come
to the U.S. for venture capital, especially for the best in the world.

What we are seeing is the early stages of globalization of entrepreneurism
and venture capital in much the same way as we did with manufacturing in
the past. It is changing and will continue to change the world
dramatically IMO.

In AZ for example we have made tremendous progress in just four years,
particularly in life sciences- more so than in decades past combined.
However, it required a large long term (read not federal but regional)
sales tax revenue stream for applied R&D in our state universities, and
specific legislation removing many barriers, and significant investment
that created one of the world's leading genomic institutes (TGen), and we
still have no institutional venture capital worth discussing- and all of
our competitors do now around the world in comparable markets (except
sadly in some U.S. states).

All that said, critical mass is still very important as is face time, and
SV is still the center of the universe in venture capital in technology,
which is why we are planning to relocate. Virtually everyone I work with
functionally at our level are in SV and have been all along. For us all
things get easier - fund raising, recruiting of talent, competency level
of attorneys/consultants/accountants- collective human infrastructure,
scheduling meetings worldwide from inbound partners and entrepreneurs
(much the same as diplomacy in D.C. or public stocks on Wall Street). The
one exception is of course housing costs for everyone involved, which has
become a very serious issue for CA as it is now beyond the ability of
everyone they need to buy even a small entry house- scientists,
entrepreneurs, professors- it's even a major issue for VC firms and their
staff. But one we must deal with.

In that regard, a modest reduction of housing costs and costs in general
for the U.S., particularly in the key markets, will assist substantially
in the competitiveness of the U.S. relative to the world.

- MM


----- Original Message -----
From: Hsu, Francis X
To: Mark Montgomery ; KM-LIST@listserv.gsa.gov
Sent: Monday, August 15, 2005 7:01 AM
Subject: RE: [KMWG] Study Says US Could Lose High-Tech Edge

Mark,
These reports are essentially about ‘inputs’ to the process. As
important as they are, it is the ‘outputs’ or ‘results’ that matter. For
many years in the 1980s-90s, leaders trekked to Silicon Valley to learn
how to duplicate the valley in other parts of the world. After all this
time, it seems only Bangalore India has been able to do it. That’s not
to say others cannot, in time, make their mark.
Perhaps trying to understand how inputs can be ‘effectively transformed’
into outputs requires more scrutiny.


From: Mark Montgomery [mailto:markm@initiumcapital.com]
Sent: Thursday, August 11, 2005 11:54
To: KM-LIST@listserv.gsa.gov
Subject: [KMWG] Study Says US Could Lose High-Tech Edge

From the www.NASVF.ORG newsletter. Some may not see it as relevant to KM,
but I certainly do. We see the same issue within the specific research
and practice of knowledge systems and related. If one's knowledge systems
are not state of the art, then neither will be the science or society. A
lot of countries "get it" and have funded it. The recent column by
Friedman in the NYT on Ireland was particularly valid and a must read for
anyone interested.

Study Says US Could Lose High-Tech Edge
China and India are educating so many scientists and engineers that it is
all but certain that the United States will lose some of its technological advantage and will suffer difficult economic adjustments, according to a recently published paper:
Boston Globe


When Guo-Liang Yu traveled to Shanghai to set up a research facility for
his Burlingame biotech company, he immediately realized that things would
be different in China. Mr. Yu says he was able to rent, design and
renovate a 20,000 square-foot facility two hours south of the city,
complete with clean rooms, in less than six weeks. "You could never do
that in United States," Mr. Yu says. Other benefits quickly surfaced as
well. He could hire top notch scientists for $7,000 a year and the
government gave him a business tax holiday for two years. Yu figures he
shaved 50 percent off his research costs by opening in China:
San Jose Business Journal





American-educated graduates from other countries, from Israel to Taiwan
to Ireland, also have launched companies in the United States. But the
Indian connection is unique because of the intense engineering focus
there. And returnees starting businesses in India, unlike those in
smaller and richer countries, can tap into a large and growing domestic
market, and into a pool of low-cost skilled workers:
Boston Globe





Mark Montgomery
Founder
Initium Venture Capital
http://www.initiumcapital.com

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