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The Age of Disruption

Still not convinced that there’s much “new” about the new economy? Then spend some time with Harvard’s Juan Enriquez. In his new book, and in an interview, he explains how business and economics are changing — and what it means for you.

Juan Enriquez, 42, lives at the intersection of science, economics, and public policy. Born in Mexico and educated at Harvard College and Harvard Business School, Enriquez returned to Mexico City to run its Urban Development Corp. Enriquez proved so successful — and so disruptive — that important political enemies, threatened by his unconventional approaches, took out a contract on his life, prompting him to return to the United States.

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“The only infrastructure that counts today is people,” he says. “The only thing you’ve got to invest in is smart brains.” Currently, Enriquez’s smart brain is engaged at Harvard Business School, where he directs the Life Science Project, an interdisciplinary look at how business will change as a result of the life-sciences revolution. His book, As the Future Catches You: How Genomics & Other Forces Are Changing Your Life, Work, Health & Wealth, is forthcoming from Crown Business. The book, Enriquez says, “started out as 800 pages of single-spaced academic talk. It became a couple hundred pages of prose that’s almost looks like poetry because I don’t want people to be afraid of science.” Fast Company interviewed Enriquez to find out more about the powerful forces of science and economics that are reshaping the world.

The (Changing) Wealth of Nations

What prompted you to write As the Future Catches You?

One of the reasons I wrote this book is that science’s ability to change the economy is so far ahead of public policy and the public’s ability to understand. There’s a real danger that we’ll have a crash because there’s a knowledge vacuum, and it could be filled with folks who are completely illiterate and uneducated. We have to make sure that when we make choices as a society, people understand the choices, agree with them, and are behind them. Otherwise, the system is going to fall apart.

One of the good things about the public Human Genome Project is that the U.S. Department of Energy and the National Institutes of Health spent a part of their budget on the ethical, legal, and social implications of their research.

Much of the book focuses on the difference in the way national economies are performing today. How do you account for the rise or fall of certain countries?

Why is it that some countries are doing well in this world and others are doing so poorly? The traditional answer is that some countries have leaders who are corrupt or incompetent. But take Mexico. It’s the only country in the world that has had four ministers of finance become president. Those guys are smart. But from 1976 until the last of those four presidents, which was just a few years ago, the minimum wage in Mexico dropped by 76%. You look at Brazil, Argentina — it’s the same story. You can’t keep blaming individuals. You can’t keep blaming economic restructuring. The answer is technology. We’ve shifted from what used to be a commodity-industrial economy into an economy that’s driven by knowledge.

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So different countries have adapted to the knowledge economy in better or worse ways?

There are regions, people, and cultures that simply don’t get it. They’re in Latin America, but they’re also in the United States. Two hundred years ago, if you wanted to be a part of intellectual society, you had to speak Greek and Latin. At the beginning of the last century, if you wanted to be part of intellectual society, you had to speak French and German. Today, if you want to participate in society, you have to speak the digital language and the genetic language. The problem with lagging countries or regions is that their leaders don’t understand the language, much less how to apply it.

Let me try to quantify the problem. If you want to compete as a knowledge nation, you need to be good at creating patents and selling them globally. In other words, you need to patent in the United States. Now, it takes about 3,000 Americans to generate one U.S. patent. It takes about 4,000 Japanese, about 6,000 Taiwanese, 1.2 million Mexicans, 1.8 million Brazilians to generate one U.S. patent. It takes about 10 million Chinese or about 21 million Indonesians. Here’s another statistic: You can’t hope to restructure your economy and compete on knowledge when your national economy hasn’t produced a single IPO in four years — and that’s the situation in Argentina, Brazil, and Mexico. Where are your jobs? Where’s your income? What are you investing in? We keep playing with World Bank and International Monetary Fund programs. They won’t work.

Gene Dreams

The genomics revolution is at the heart of much of your book and is also the focus of your project at Harvard Business School. For nonscientists, how should we think about genomics and business?

The first thing you need to know is that an orange is the same thing as a floppy disk. When you think of a floppy disk, it’s a container with a string of ones and zeros. The plastic around it doesn’t matter — all that matters is that it’s a source code. If you take a keystroke on your computer, when you punch that keystroke, you’re changing one string of ones and zeros and substituting another. That will change a letter; it will add instead of subtract; it will send an email; it will create an image. That ability to modify a series of bits inside the plastic casing of that floppy disk is what powers the global economy today. Last year, it accounted for 19.1% of U.S. economic growth.

Now, in 1995, a scientist named Craig Venter found a way of describing an entire life-form as a string of nucleotides that form DNA. He wrote the source code for a living thing. Imagine that you have the source code for an orange — it’s contained in the orange’s floppy disk, a seed. That floppy disk falls to the ground, and the source code starts to give instructions: Put out a root; put out a stem; build a leaf that looks like this. If you have the source code and you understand how it’s written, then you can modify what a plant form does. That gives us direct and deliberate control over the evolution of every species on this planet. And that is going to be the greatest single driver of the global economy.

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Is this sci-fi, or is this part of business today?

This is going to happen very quickly — in fact, it’s already happening. A company that didn’t exist four years ago — Celera — now has the largest private computer in the world. It has one of the largest databases in the world — it has about eight Libraries of Congress of data sitting inside its basement. It has become one of the largest users of electricity in the state of Maryland. This is a competition where companies that didn’t exist five years ago are going to become dominant global players.

Let me give you an example. When you go camping, one of the things that happens from time to time is that as you’re walking through the forest, a spider will appear in front of your face. You can’t figure out where that spider is coming from, because the forest canopy is 30 feet up. Of course, when you look closely, you see that the spider is hanging from a single thread of spider silk.

To you and me, that’s interesting. The U.S. Army sees that, and it thinks, “I’d like to have more of that material.” Because spider silk is very strong — it’s four times as strong as Kevlar. Now, they could try to send army privates into the forest to milk the spiders, but that’s very inefficient. But what they can do is to take source code for spider silk, change the source code for a goat, and make the goat produce spider silk protein in its milk. Then, when you milk the goat, you have spider silk.

The next Cisco Systems, the next Microsoft is going to be a life-sciences company. It could be a company that today calls itself a computer company: IBM’s largest project is Blue Gene. Sun Microsystems’s largest project is deciphering protein. Compaq Computer’s driver is the alpha chips used for sequencing a human genome. So it may be a computer company. But it may be a cosmetics company. One of the reasons that Procter & Gamble tells Wall Street that it’s going to merge with a pharmaceutical company is that for the first time in 4,000 years, a cosmetic company may be able to deliver what it promises: different skin, younger-looking eyes, a whole series of things that you can achieve without plastic surgery, because we are beginning to understand the human genome.

What businesses will be touched by the genomics revolution?

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This is going to change energy companies, computing companies, cosmetics companies, mining companies. It will change how pharmaceutical companies operate. A pharmaceutical factory is almost like a beer factory. There are large fermentation vats in vast facilities. It’s very expensive to make long molecules inside of metal vats because they’re fragile and they tend to break. So the fermentation process is delicate. Now, it turns out that living things — you and I, for example — are very good at making long molecules. Our bodies are collections of long molecules. So what companies like Genzyme Corp. are doing is, instead of building their next factory like the one that’s here in Cambridge, they’ve engineered a single herd of goats in western Massachusetts. Now Genzyme Transgenics Corp. produces everything that factory produces in one herd of goats.

Big Changes, Big Consequences

How do you see science and technology changing competition?

The margin for making mistakes has gotten much smaller. In a commodity economy, it’s hard to kill off your business. You still have the mine. You still have oil wells. You can always rebuild. In a knowledge economy, if you make a mistake, you’re in trouble. You can go back to the 1970s for an example. The Microsoft of the 1970s, the company that the U.S. Department of Justice was afraid of, was Xerox. It was the dominant technology company: It had the mouse, the browser, Xerox PARC. Back then, the question was, how is anyone ever going to take on Xerox?

The same thing happens in countries. When a country doesn’t pay attention to the only thing that matters — it’s citizen shareholders — those citizen shareholders get bought up like free agents. Brains has become a market. Right now, in Silicon Valley, there are about 4,000 Indians and Chinese who generate more wealth than all of the exports of India.

If you want to compete in bioinformatics, first you need to compete for really smart people. You need really smart people who understand how to manipulate nanomolecules. Those really smart people want to live someplace where they’re safe, where there are other really smart people around, where there’s financing, and where there’s a future. Today, 15% of the PhDs in science and technology who come here from China go back to China. The other 85% say that this is a better place to do business. The people today who are talented don’t want to work on the basis of citizenship anymore. They work on the basis of a knowledge nation.

Give us some idea of the relative scale or importance of the changes you chronicle in your book.

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Let’s imagine for a second that we’re still having this conversation, but let’s change the date and the place. Let’s say that it’s October 12, 1492, and we’re in London, Paris, or Madrid. We wouldn’t have a clue that the entire balance of power in the world had shifted that day. The first printed map won’t appear until 1503. But just because we don’t understand the magnitude of the change doesn’t mean that the change hasn’t happened.

A very similar thing to October 12, 1492 happened this year: On February 12, 2001, you and I could see the entire human genome on our computers. We still don’t know what it means. It looks really complicated. But I can tell you that our grandchildren are going to remember that date. There is going to be the pregenomic era and the postgenomic era. And the first companies to get it, the first people to get it, those are going to be the dominant societies on this planet in the next century.

Alan M. Webber (awebber@fastcompany.com) is a Fast Company founding editor. Contact Juan Enriquez by email (enriquez@mediaone.net).