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Tech
Advantage
by Rohit Shukla
10/17/01
Area’s small companies can play big role in new national
mission
Even
before the Sept. 11 attacks, the tech downturn had turned ugly in
many parts of the country. Little noticed was the relative calm
in Southern California, whose tech economy some of us have characterized
as the “dogged tortoise” (compared to the “exhausted
hare” in the Bay Area).
In the aftermath of our Black September, the region’s tech
industry has gone from quiet hope to desperate uncertainty. But
despite increasingly tenuous economic forecasts, the prospects for
holding our own are still quite reasonable.
With the implosion of the defense industry in Southern California
in the early 1990s, many small companies emerged whose technologies
were developed in a more closeted context. Between 1992 and 2000,
some of these companies found success in the exploding world of
network management, telecommunications applications (routers, switches
etc.), encryption, and security solutions in such exotic areas as
combinatorial chemistry and detection technologies.
More often than not, their visibility was slight, their success
modest. In light of the Sept. 11 event, these technologies, talents
and histories suddenly have become very relevant to a new national
mission. The boundary between defense-specific work and commercially
applicable technologies has been fuzzy in the last few years. Now
it may be breached for good.
In this pursuit, we may have found a regional competence that actually
is differentiated and competitive. The challenge for the region’s
tech industry is to identify and address opportunities in this unfolding
national concern. In this, we need to understand that the urgency
will be with us for a long time.
More than ever, commercial industry is acutely aware of the need
to maintain a robust and protected infrastructure, and the defense
industry may be more open to the evolving technologies of the past
few years.
The irony, of course, is that we must become more sophisticated
in dealing with a national enemy that exploits simplicity. Thus,
small may be quite beautiful because smaller innovations may actually
work at the ignored edges of our national technology marketplace.
The region’s defense industry itself (in many ways, still a
cauldron of our technology base) is much less dependent on large-scale
manufacturing and assembly work. It is more oriented to satellite,
navigation and communications components, high-tech weaponry and
“digital warfare.” In light of the unfolding military
mission, these activities are likely to be in greater demand.
Picking up the slack
Moreover, the region’s universities (and companies) are major
recipients of public R&D funding. In light of the dip in corporate
R&D, this is a not-inconsiderable advantage. Important innovations
in nanotechnology, biosciences, engineering, and security and infrastructure
technologies will continue to be generated at Caltech, USC, UCLA,
the Jet Propulsion Laboratory and Hughes Research Labs. They also
can be found at companies like Rockwell, Raytheon, TRW, Northrop,
and Computer Sciences Corp. The reduction in corporate R&D also
leads to opportunities for acquisition or mergers for Southern California
startups with strong intellectual property.
One should not dismiss the still-considerable challenges. Our high-school
educational system and our physical infrastructure – transportation,
housing, traffic--do not match the needs of an economy increasingly
based on specialized information, knowledge and support. We may
be able to import our way out of a scarcity of workers, but we become
less attractive to them if these problems are not addressed.
The real danger for Southern Californians is that we mistake current
body blows for system failure, that we focus too closely on economic
forecasts that are themselves uncertain, and that we drop out from
intelligent, long-term economic engagement. In renewing our commitment
to building a solid technology base, we follow the lead of John
Kenneth Galbraith, who, famously, said, “the only value of
economic forecasting is to make astrology respectable.”
Rohit K. Shukla is president and chief executive of the Los Angeles
Regional Technology Alliance, a private non-profit organization
dedicated to the growth of Southern California’s technology
base.
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