WE CONTINUE OUR interview with former Intel chairman and CEO Craig Barrett, who retired last year, but who continues to toil on world-changing issues such as innovation, education and technology in emerging countries. (See Part 1 of interview.) Barrett also is chair of the Irish Technology Leadership Group, a business network in Silicon Valley and Ireland that hopes to boost Ireland's ailing economy and education. Intel built a large manufacturing site in Leixlip more than 20 years ago, and Barrett's ancestors hail from Ireland.
CoolGlobalBiz: At the recent Global Technology Symposium at Stanford, you said that countries must change their business plans to accommodate globalization and all these new capitalists. But few governments function as well as large, well-run companies. Can governments take advantage of rapid innovation, or will they screw it up on a global scale?
BARRETT: If governments attempt to dictate specific actions, they'll screw it up. Golly, just look at the 2,700-page bill on healthcare reform in the United States. Does anybody believe we're going to reform healthcare, or just add to the complexity and burden and costs on a system which already is not functioning very well?
But what governments can do is set the tone. If the United States really is interested in competition, it can use its basic strengths: the free-market approach to life, which applies to individual opportunities. It could have an immigration policy which opens the doors to the best and brightest around the world, to come here and innovate. It can focus on its education system and focus on funding basic research in universities, which leads to the creation of smart people and ideas. It could minimize the bureacratic burden on startup companies, and adopt tax policies which promote investment and research in innovation and (technology) infrastructure.
The government can set the environment which allows smart people to do smart things.
CoolGlobalBiz: The innovation scene in China and India?
BARRETT: If you look at venture capital activity, which has been primarily the domain of the United States, you see that it's spreading around the world. Intel, the biggest high-tech venture capitalist in the world, used to do about 90% of investments in the U.S., and now 50% is done abroad, increasingly in India and China -- where two big governments there are trying to create the right environment (for innovation and growth).
There’s no question there are challenges in China from personal freedom standpoint. But there's also no question that the Chinese recognize the necessity of a fast-growing economy. There are various estimates that the Chinese have to create 15 or 25 million jobs a year just to maintain social stability, so they recognize this economic imperative . . . That's why you see so much entrepreneurial activity in China now. They have incubators and startups and a heavy emphasis on education and growing their research base. (Photo, Intel.)
I'm frustrated by these topics. The United States keeps saying "We're the best, we've always been the best, we'll always be the best." The President said the other day that our workforce is the most productive in the world, nobody can beat us, and all we have to do is wait for the economy to recover and we're gonna be okay.
People say we don't have to worry about those Indians and Chinese, they're good at low-cost manufacturing but they'll never innovate and come out with anything new. We used to say that about the Japanese, too. In China and India, these are not exercises in low-cost manufacturing. These are entrepreneurial startup exercises in next-generation technology, next-generation products. The superiority complex we have in the U.S. is going to work to our detriment.
The issue is competing in the 21st century . . . Look at the U.S. stimulus package . . . Nothing is targeted at looking forward. The Australians and Chinese and other countries look at their stimulus packages and say, "Alright, if we're going to bite the bullet and invest tens of billons of dollars to stimulate the economy, let's at least situate it looking forward to the 21st century and competition. Let's not look backward. The U.S. is looking backwards.
CoolGlobalBiz: There's an increasingly diverse global workforce as far as language, ethnic groups, religions, gender differences. How can companies avoid a Tower of Babel and make the most of the new workforce?
BARRETT: You do all the standard stuff, such as training your employees on how to work cross-culturally. If there are Japanese employees in a meeting, for example, they may be inclined toward consensus decision-making. You also have to have a common culture, a common ethic in your company, so people understand what you're doing and how you do it. Intel's employees probably are getting close to 40% or 45% outside the U.S. So independent of where you work, you have the same corporate culture, the same expectation level and the same set of systems in place . . . .
Once you do that, I don't think there's any real secrets or magic in this. Intel has manufacturing plants around the world, and the expectation level in every plant is the same . . . Our expectation levels are high, and you perform at that high standard. Modern-day companies export international operating procedures an the same set of standards in every country. If local standards are higher, we adopt those standards. But never allow yourself to lower the standards.
I remember one detailed discussion in the Philippines, years ago, in Manila. I was talking to the plant manager, (telling him) that the inside of the plant was not very clean and neat . . . He said, "Hey, Craig, do you see the low-income slums outside the window? That's where our workers come from. They don't come from a nice suburban environment. We can't expect them to have the same attitude here as other Intel employees."
So I took him to the (upscale) Intercontinental Hotel nearby, and said "Where do these (Filipino) hotel workers come from?" He couldn't argue that our plant in Manila could look like a second-rate facility, while the Intercontinental Hotel there could look as good as any hotel in the world.
CoolGlobalBiz: I assume you expect Intel and other companies to increasingly go global?
BARRETT: Yeah, they're going to be more global, because the rest of the world is growing a lot faster than the U.S. is growing. The IBMs and Intels and Ciscos and others will become increasingly international . . . and dependent on other markets and their workforces for their success. That's the difficult proposition when you look at (economic) success and growth. These flagship American companies can succeed without hiring another U.S. employee. That's not politically correct to say, but it's true . . . .
When you have senior political leaders in the United States saying that Benedict Arnold CEOs are shipping jobs offshore, that's a simplistic model that flies in the face of economic reality, which is that growth opportunities are offshore, and to be internationally competitive you have to hire the best and the brightest from around the world.
BARRETT (laughing): I respect what Meg is doing, but no chance. I’m an engineer, I‘m pragmatic. I’ll tell you what the problem is and how to fix it, but I’m not a political animal . . . I'm not going to change course (on issues). My wife (Barbara Barrett, attorney, businesswoman and ex-U.S. Ambassador to Finland) would be a good political candidate. (Photo, U.S. State Department.)