Previous Fora / 2003

Speakers

Knowledge based economy

First draft march 2003

Prof. Sergio Barabaschi
Vice-President, Euro CASE, Italy

Abstract

When we try to design the future strategy of science and of the related technologies, we have to consider also two essential boundary conditions:

Public acceptance;
The new production and trade environment

The rapid evolution of science and technology, that has characterized the last fifty years and the introduction in the market of many new products, whose impact was not yet fully evaluated, has generated many great benefits, but has also created, some misunderstandings on the role of scientific discoveries and of their introduction in many new products, that are influencing our way of living.

We have to be prepared to debate the issues, engage in discussion, translate our language and discard jargon, so that as much as possible is clear to anyone who wishes to consider the facts.

There is the need to engage with society if the output is to be accepted. To this end a public call for views has to be promoted.

It is only trough such a process that we can advance and realize for society the potential benefits available and address public concerns and regulatory issues.

On the other side, when translating scientific results into technological developments, we have to consider very carefully the evolution of the Market as well as the current instability in the world economy and the circumstances that have delayed the implementation of some new technologies.

A part these recent events, in the last years, we have assisted in a noticeable evolution of the production and trade environment, in which economic enterprises operate.

This well-known environment, which remains characterized by solid market and free competition rules, has been subject to some adjustments, under the pressure of various political, economic and technical changes.

As examples, we have assisted in the :

Increase of market opportunities and threats: less barriers to free trade, opening of new markets, birth of new product lines, better international protection of IPR, new aggressive competitors, new potential suppliers.
Progress in the technical Knowledge base: Bio-technologies, Smart materials, Nano-technologies, Advanced Sensors and Automation, Micro-electronic, innovative production techniques.
Availability of new powerful instruments: Portable IC systems, Work-stations, Computer Aided Engineering, Simulation codes, Knowledge Data banks, Intelligent manufacturing systems, Electronic commerce, Web-based IC Systems.

It is also clear that a company's intangible assets have increased in relative importance, compared with the other asset's components.

This is due to more open trade and financial environments, where competing companies have equal access to the same sources of capital and of other inputs: materials, components and production equipment's.

Therefore the acquisition of distinctive competition factors can't be based mainly, as in the past, on the tangible components of the Company assets. Instead it has to be based on the refinements of the perception and management procedures, and on the quality and continuos upgrading of the technical know-how and of the human capital .

In other words: the quality of the Knowledge, which is present at various level in the company, is the key to success.

We have to assure the best cooperation of the well known quadric partite alliance among: Skilled people; Specific Know How; Necessary Hardware; Energy;

In this " Knowledge-based economy", the management of a company is difficult and requires the assistance of highly educated staff.

Rapidly changing market needs demand fast and effective innovation and require well-prepared personnel, especially in the scientific/engineering and technological fields.

The interaction between companies and Universities becomes a high priority for both sides, and engineering academies play an essential role in bridging the gap between the two sides.

1) summary and conclusion

In recent years, we have assisted in a noticeable evolution of the production and trade environment, in which economic enterprises operate.

In this new situation, the acquisition of distinctive competition factors can't be based, as in the past, on the tangible components of the Company assets. Instead it has to be based on sophisticated management procedures, on the quality of the technical know-how and of the human capital .

With other words: the quality of available and consolidated knowledge is the key to success.

Along this line of thought, all aspects of knowledge management, in its many and most diversified aspects, are the central focus of the top management of both public and private institutions.

In this " Knowledge-based economy", the governance of any enterprise is difficult and requires the assistance of highly educated staff.

Rapidly changing boundary conditions of both opportunities and theaths demand fast and effective innovation and need well-prepared personnel, especially in the scientific and technological fields.

The interaction between Companies and Universities becomes a high priority for both sides, and scientific/engineering academies play an essential role in bridging the sometimes existing gap between the two sides.

2) The recent evolution of the Production/Trade environment

In recent years, we have assisted in a noticeable evolution of the production and trade environment, in which economic enterprises operate and where most engineers find their jobs.

As examples, we have assisted in the :

Increase of market opportunities and threats: less barriers to free trade, opening of new markets, birth of new product lines, better international protection of IPR, new aggressive competitors.

Progress in the technical Knowledge base : Bio-technologies, Smart materials, Nano-technologies, Advanced Sensors and Automation, Micro-electronic, innovative production techniques.

Availability of new powerful instruments: Work-stations, Computer Aided Engineering, Simulation codes, Knowledge Data banks, Electronic commerce, Web-based IC Systems.

The evolution of international competition has forced many industrial and service companies to adapt their operating structure and redesign the dimension and the quality of their human capital.

We have seen a great proliferation of merging and acquisition, down-sizing and re-locations of various industrial activities, which have generated a new and interesting picture of the international production and trade system;

It is also clear that a company's intangible assets have increased in relative importance, compared with the other asset's components.

This is due to these open trade and financial environments, where competing companies have equal access to the same sources of capital and of other inputs: materials, components and production equipment's.

Therefore the acquisition of distinctive competition factors can't be based, as in the past, on the tangible components of the Company assets. Instead it has to be based on the refinements of the management procedures, and on the quality of the technical know-how and of the human capital .

In other words: the quality of Company Knowledge is the key to success.

Along this line of thought, all aspects of knowledge management, in its many and most diversified aspects of quality and periodic education of the technical staff, technical know-how, marketing information and intelligence, production and logistic optimization, supplier selection, materials and components quality, products performance, innovation criteria and others, are the central focus of the company's top management.

In this " Knowledge-based economy", the management of a company is difficult and requires the assistance of highly educated staff.

Rapidly changing market needs and competition demand fast and effective innovation and need well-prepared personnel, especially in the scientific/engineering and technological fields.

The interaction between companies and Universities becomes a high priority for both sides, and engineering academies play an essential role in bridging the sometimes existing gap between the two sides.

Management has to operate in this difficult loop:

To maintain market shares, products must continuously evolve.

Designs have to respond to new boundary conditions (to : sustainability, environment rules, international standards, international out sourcing) and have to provide user-friendly solutions.

Companies have to comply with several cultural backgrounds, on most companies' interfaces: share-holders, customers, suppliers, employees.

Products are therefore becoming increasingly complex and development costs increase.

At the same time, products' commercial lives decrease, making it difficult to recoup development costs.

It is not difficult to conclude from this synthetic picture of the new, and most demanding production/trade environment, which is also the most important Engineer's playing field, that the characteristics of this rapidly changing environment should, by itself, influence scientific/engineering education.

In reality, tecnical education is subject to a second pressure, that originated by the parallel evolution of scientific/engineering profession.

3) Evolution of scientific/engineering roles in the knowledge society

If, for a moment, we consider the "scientific/technical graduate" as a product of university education, we may say that this special product has to evolve under the pressure of both Market Pull and Technology Push actions.

On the Market Pull side, we have seen the evolution of the main environments in which engineers work. On the Technology Push side, we have assisted to an equally important evolution of the tools that engineers use (Work Stations, design and simulation program, information and communication technologies).

All this has changed Engineers' tasks, what they have to know and how they have to work.

It is reasonable to assume that the main effects on the engineering profession described below are clearly shared by all participants of this workshop today.

Design criteria: Twenty years ago the two main boundary conditions were technical performance and cost, while now, several other parameters must be considered, making the traditional trade-off between performance and cost much more complicated and demanding. For instance: local codes and standards, product liability requirements, environmental considerations, timal use of resources, and recyclability of the waste, represent a new set of boundary conditions, which have to be considered in the conceptual and planning phase of the engineering profession.

Knowledge base: The Engineering Handbook contained the fundamentals of most design, representing the greatest part of the then-available technical knowledge. In less then one thousand pages, we had the whole of technical information. Now, to begin a design, we have to search the relevant information in a much greater knowledge-body.

Technical complexity: We used to classify products by their main technical component and we were therefore speaking of mechanical products, electrical products and others. Now it is not so common anymore to find products in a sole technical class: the integration of different technical competencies is not the exception but the common rule.

Let'suse the classic example of the locomotive, which was considered a typical mechanical product and that now has a much more complex structure in which mechanical parts account only for 35% of the total value. Because the technical content of most engineered products today require a multi-disciplinary approach,, we need now, more often than in the past, to use teams of engineers with complementary skills, to satisfy the competencies.

Design tools: In the past, we used to utilize the tables and graphs of an engineering hand-book or logarithmic tables and electro-mechanical computers and now we can use portable computers or work-stations endowed with powerful codes for flow and structural analysis computations. We used to prepare wood models and now powerful simulation codes allow us to see the product of our design and to analyze in detail its performance when we are still in the conceptual design phase. We used to go to the library for days to consult the technical journals, seeking to find what we needed, out of few thousand pages of technical literature. Now, with the help of data banks of the internet links and of intelligent browsers, we have easy access to million pages of relevant information.

These new sets of engineering challenges and opportunities, together with the need for an European Framework, should be considered in the future evolution of the engineering education process and of its substance.

The main action capable of solving these list of challenges is that of considering that this new production/trade environment offers not only threats but also opportunities that company managements do not have to miss to activate( see slide budapest/B )

Among the opportunities that should be activated, I should like here to consider the importance of two lines, which complement those presented by other speakers:

Inhancing the company perception system.( see slide budapest/C )

Introducing a more effective management of the innovation process, ( see slide budapest/D-/E ) (by carring out a multichannel knowledge acquisition system)

4) New trend in technology management

I will address here the new trend in managing industrial research activities , that is, research different from both creativity driven or education research, which seem to follow different rules.

Industrial research is conceived and directed to supporting economic activities, quality of life and employement and therefore to supporting Knowledge Users, who do not belong to the research community ,who consider research's results as implements, who aim to different goals and speak different languages .

They are calling upon researchers, as providers of specific technical answers , or as provider of solutions to a specific problem.In this kind of research activities knowledge is not an end in itself, research results should be better considered as tools capable of supporting the company strategy.

Here , research is just a part of a more complex design ;

RD is surrounded by Non-RD activities , with which it must interface , in a single and harmonic plan.

Some scholars , in fact , instead of using the expression " managing RD " use expressions as : managing technically driven change or managing technical innovation .

And managing change effectively is always more important, both in the private as in the public sector.

Some basic principles

In the preseny Production/Trade environment, in what we call a knowledge base society the final aim of these basic principles is clear : How to be more effective in achieving improvements , by means of technical change

As usual , the analysis of the past mistakes is an important source of ideas for the new management principles, together with the consideration that for achieving improvements , the good management of in-house RD was not enough.

Research and Development activities had been kept too isolated from what was happening both before and after RD : the parallel with the relay race ,that can fail at any stage involving all player was introduced.

To blame the others was not accepted anymore

In this slide you can see some reasons of : How do we fail in managing change :

misinterpretation of users' needs
insufficient definition of objectives
mismatching constrains in results utilization
useless research of available knowledge
underestimation of results validation's needs
under evaluation of creativity needed at interfaces
unforeseen technical difficulties
incomplete work-plan

These exercises produced the following guide lines :

Research structures role had to expand from a producer of new knowledge to a solution provider;
In house research had to be functionally integrated both with other knowledge-acquisition-systems and with the overall strategy.
The research plan had to be managed as a part of a wider Innovation Project, including activities situated both before and after the proper research.
Deliverables became more complex.First of all ,were not anymore simple reports , thrown over the fence , but rather validated knowledges'platforms , capable of solving a specific problem , expressed in the suitable language and integrated with users friendly instruction manuals.
In these much more complicated contest,research structures had to interface on many sides, and also with organizations speaking different language. This required a new mind-set, intelligence and " savoir faire ".

In-house skills and creativity had to be re-deployed.
In this frame , knowledge was not anymore an end in itself, it was instead better described as a tool aimed to achieving a different end : the solution .This induced to seek a better utilization of extra-muras : knowledge , tools and skills.
In house research was just a component of a wider " knowledge acquisition syste which could use several channels in parallel .
The design of a competitive solution , its breakdown in elementary knowledge components , the decision of which way to follow to get each part , and the final assembly of knowledge ,coming from different sources, were some of the many detailed techniques that needed to be mastered

Beyond these oversimplified principles, from these ten years of experiments, a lesson was learned : each Research has its own requirements

For instance , seven main types of industrial sectors were analyzed , to find that each one of them needed specific taylor-made rules.

For instance , great differences exists in the structure of the innovation models that are applied by the so called : Assembly Industries , when compared with those applied instead by the Whole Product Industries.

5) A new and important role for European Science and technology Academies

The emergence of what we call, the knowledge-based society, has underlined also the relevance of scientific academies , as a key source of input to policy formulation, at the various European levels: regional, national and of the E.U.

The issues facing Governing Bodies are becoming increasingly complex and have a widespread impacts on the sustainable development of society and on the quality of life of the citizens;

Governments have to deal also with issues requiring risk analysis and with decisions in areas of great public concern.

Recent decisions in the fields of environment, public health and safety have generated some public distrust on the overall capacity of generating comprehensive scientific advice or of integrating them in the law-making process.

We are facing a fast evolution of our knowledge base and new technologies are rapidly introduced in our way of living and in many products, which are affecting our development and our quality of life.

The process of producing sound technical advice is therefore rather difficult. Nevertheless it will be always more demanded.

Its outputs; comprehensive advice, will have to fit smoothly into the traditional process leading to new directives and laws, if we want to assure Government effectiveness.

In addition, understanding Law-Makers' needs, and managing the critical interface, which lays between the two Systems presents problems of adaptation, for our scientific academies.

New skills, such as those : of translating political needs into technical words, of assembling an advice and of re-translating it into an user-friendly language; are not diffused among academies.

Nevertheless, I am confident that our community has a strong motivation to serving the society and is ready to learn what will be required for these new duties.

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