When Business Imitates Life

Part 3 of an excerpt from It's Alive discusses how biologists' grasp of life's tiniest elements is shifting the economy's makeup

It's Alive: The Coming Convergence of Information, Biology, and Business

by Christopher Meyer and Stan Davis

Chapter 1: Learning from Life Cycles

(Part 3, click here for Parts 1 and 2)

The Next Economic Life Cycle

Even as the information economy matures, a new economic life cycle -- the molecular economy -- is reaching puberty. Watson and Crick's deciphering of the DNA molecule in 1953 marked its birth. For fifty years, the developmental curve for the molecular economy has lagged behind the curve of the information economy. At the same time, driven by the desire to scribe ever-smaller features on a silicon wafer, our power of magnification has grown from 1,000X in the 1930s -- enough to see bacteria -- to 300,000X in the 1980s to 100,000,000X in the 1990s -- the scale of a single atom.

There are two threads here: a greater understanding of the molecules that control chemical and biological functions and the super-miniaturization of manufacturing. They are converging to give us the ability to see, simulate, and manipulate matter at the molecular level. The result is an enormous acceleration in biotechnology, to be followed by the development of novel materials and the takeoff of nanotechnology. Collectively, these three developments are what we call the "molecular economy."

On the day we did final proofing of the manuscript for It's Alive, a story appeared in the New York Times headlined "Scientists of Very Small Draw Disciplines Together," and began with by stating that Nanotechnology, Biotechnology, Information technology, and Cognitive science "are converging into a new field of science vital to the nation's security and economic clout" They call it NBIC (and it's so new no one knows whether to say "NIB-bick" or "EN-bick,"). The article reported on a three-day meeting in Los Angeles that attracted participants like the National Science Foundation, Hewlett-Packard, and IBM, not to mention investors. The Times continued: "The organizers say the greatest opportunities lie in bridging the gaps between the rapidly growing ranks of nanoengineers and researchers in other fields . . . because all the activities of living cells are governed by nanoscale interactions of atoms and small molecules."

Call it NBIC or call it molecular science, it is the convergence at the molecular level that is new, and it's the science driving the next economic wave.

At the Xerox PARCs of today, in places like Cambridge, Massachusetts, and San Diego, California, scientists have gotten down to "the bottom" of things. Researchers now have the technological prowess to push individual atoms around, to make images of genes in action, and of individual proteins as they fold. At IBM, physicists have managed to slow down light in order to "capture" a photon. At the University of Konstanz in Germany, researchers have created an optical microscope that uses a single fluorescent molecule as its light source.

Feats of biological manipulation include genetically modified organisms, highly controversial creations such as corn plants endowed with pest resistance by the insertion of bacterial genes into the corn genome. Scientists, giving new meaning to the term "monkey shines," have monkeyed with the genes of a rhesus monkey to give him a gene for bioluminescence borrowed from a jellyfish.

Zeiss, an optics company headquartered in Germany, has taken the traditional electron microscope, given it a laser-powered "cut and paste" component, and turned it into, essentially, "PhotoShop" for cells. A laser can excise a piece of tissue as small as a chromosome. Then photonic pressure can catapult that chromosome directly into the cap of a microfuge tube. Future applications include transferring drugs or genetic material into cells without needles. Simply cut and paste.

This control of the very small arises in part from the desire to make even smaller electronics. IBM has developed a transistor made not of silicon but from a nanotube (a structure made of a handful of carbon atoms) that can compete at lab scale with the leading prototypes of silicon transistors. And Isaac Chuang, a professor at the MIT Media Lab's Center for Bits and Atoms, built a quantum computer that uses the spinning nuclei of atoms to represent the ones and zeros of binary code. Despite extraordinary lab-scale developments like these, the molecular economy is today only entering its growth phase, just as the information economy was when we saw the first transistors. Initially, transistors gave us pocket radios. We had to wait until the microprocessor before the world could fundamentally change, and for the modem before the change could begin to reach its full potential.

Following the life-cycle model, today the information economy is in its third quarter, meaning that information technology has become a part of every business, and software and connectivity are becoming elements of every product. The molecular economy, as we've said, is still an awkward adolescent, just now entering its growth phase, when science moves out of the laboratory to become commercial technology. Except in a few industries like pharmaceuticals, the technology is not yet in general use.

That will come, but today, we can see the molecular economy taking off by looking at the growth of resources devoted to it.

• Biologists have replaced physicists as the leading users of supercomputers, according to IBM's Life Sciences group.

• In just ten years, employment in the biotech sector has more than doubled, rising to 191,000 in 2001.

• Biotechnology has attracted more investment in 2001 and 2002 -- two off years following the 2001 zenith -- than in the entire five-year period of 1994-98, which included the previous peak in 1996.

• The number of biotech patents filed each year has increased fivefold in the past ten years.

• The National Nanotechnology Initiative's budget has surged nearly sixfold in the past six years, with over $700 million allocated for 2003.

During the next decade, molecular technologies will follow the same progression we've seen in the information technologies before them: They will move out from the lab and the basement, and into the fabric of enterprise itself. This will first take the form of new approaches to existing tasks, molecular tasks -- a watch that reads your blood glucose level without needles, or a new class of ceramic materials that reduce the fuel consumption of jet engines. The second step is entirely new businesses such as decoding the genetic profiles of the inhabitants of Iceland, Estonia, Tasmania, and Taiwan,¹8 then encoding them in a database, and then marketing the data. New capabilities for manipulating the molecules of living, evolving matter have already changed how we reproduce, how we heal, how we develop our foods and medicines and fibers.

Because the molecular economy is arriving before the information economy has fully matured, the two economic waves are converging.

In the third phase, molecular solutions will appear in industries outside of pharmaceuticals, agriculture, and materials. Compare the way that information content now drives value far beyond the high-tech industry. Automobiles, for example, the archetypal product of the late Industrial Age, now contain more than 100 microprocessors. The information technology sector is still a relatively small part of the economy; its share of the GDP was estimated at 8.3 percent in 2000. What proves our point is that although the information-technology industry accounts for a small portion of GDP, it accounted for almost 30 percent of overall real economic growth between 1996 and 2000 despite its rapidly declining unit costs.? This growth pattern will be repeated in "molectech." And in the fourth quarter of this new economy, our understanding of biology and molecular science will give shape to new and different organizational structures, more than a few decades away and still too far off to see.

Even as the pattern repeats, something unprecedented is happening. Because the molecular economy is arriving before the information economy has fully matured, the two economic waves are converging. What we learn about evolution (in this second quarter of the molecular economy) will change the way the information economy is managed in its fourth quarter. Conversely, advances in information technology, such as simulation, will accelerate our learning about evolving systems of molecules.

Anyone trying to run a business -- or live a life, for that matter -- over the next ten years will be dealing with two major forces: first, an environment in which change has doubled its pace and volatility has increased, creating the imperative to adapt. And second, the beginning of a new economic life cycle, in which the makeup of our GDP, which has in the past migrated from agriculture to manufactured goods, from goods to services, from goods and services to information, shifts again, this time to value created by molecular technologies.

How will management change to incorporate these developments?

In the Industrial Era, we used the technology that was creating the change to manage the change. Engineering approaches to organization used the same physics-based ideas that shaped the assembly lines to construct organizational structures and processes. Likewise, we are now using information technology -- e-mail, workflow, CAD/CAM, ERP -- to manage the networked organization that has emerged in the early phases of the information economy. As the industrial technologies of energy led to cities, labor unions, and suburbs; as the information technologies of networks are leading to business alliances, chat rooms, and global English; the insights of evolution will shape our society in the first half of the 21st century. Because the challenge is adapting to accelerated change and volatility, the concepts of evolution -- tuned by nature over four billion years to cope with environmental change -- are just what's needed to create the next generation of organization: the Adaptive Enterprise.

From the book: IT'S ALIVE: The Coming Convergence of Information, Biology, and Business by Christopher Meyer & Stan Davis. Copyright (c) 2003 Cap Gemini Ernst & Young U.S., LLC. Published by Crown Business, a division of Random House, Inc.

Christopher Meyer and Stan DavisChristopher Meyer is director of the Center for Business Innovation in Cambridge, Massachusetts. He is also a founder of Bios Group, Inc., a Santa Fe–based venture that develops applications of complexity theory for business.With more than twenty years experience in general management and economics consulting, he is an authority on the evolution of the information economy and its impact on business. He was listed among Consulting Magazine's "25 Most Influential Consultants" in 2001, and served on Time's Board of Technologists in 2002.With Stan Davis he was co-author of Future Wealth, published in 2000, and Blur, published in 1998.

Stan Davis is a Senior Research Fellow at Cap Gemini Ernst & Young's Center for Business Innovation. His consulting has included senior executives at Apple, AT&T, Bank of America, Cap Gemini, Ernst & Young, Ford, JPMorgan Chase, KPMG, Marriott, Mercedes-Benz, Met Life and Sun Microsystems. Davis is advisor to the board of the Massachusetts Medical Society, which publishes the New England Journal of Medicine.

Davis has shared his expertise in twelve books. His most recent book is Lessons from the Future. His 1998 Blur was a BusinessWeek bestseller, and his 2020 Vision was named the best management book of 1991 by Fortune.

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