UNO November 2022

UNO+1 Interview with Cristina Garmendia by José Antonio Llorente

“Complex times like the present, are prime times for entrepreneurs,” shares Cristina Garmendia, a woman with a unique career, in this interview. She has created companies such as Ysios Capital or Genetrix, linked to investment in the life sciences, she was Minister of Science and Innovation in the Spanish Government, and today her public image is inextricably linked to her presidency of the COTEC Foundation for Innovation, a non-profit organization that has coined a valuable formula for understanding the changes that our societies are undergoing: “Innovation is any change (not only technological) based on knowledge (not only scientific) that generates value (not only economic).”

We discussed entrepreneurship in uncertain times, innovation in business and science, the similarities between the two fields, and the relevance of knowledge and education in a society like ours, which lives with a great sense of vulnerability, but also has reasons to be optimistic if it knows how to take advantage of talent, critical thinking, empathy, teamwork, leadership and the cross-cutting application of knowledge. An invitation to manage uncertainty.

How can innovation help us in times of uncertainty?

Crises are abrupt changes that provoke uncertainty and the response to uncertainty only comes with more changes, in the way we face problems, think about solutions, and act. We experienced this firsthand on a global scale with the COVID-19 pandemic. The world stood still until vaccines appeared. But it didn’t end there. Countless problems arose: in the organization of work, the educational system, the distribution of basic goods, the way we relate to each other, etc., and all of them found response in innovation. This is precisely what the Cotec Report 2021 Yearbook addresses. The 2022 Yearbook, which we have just presented, is about how innovation helps to combat inequality, which is another of the great problems of our time. It is worth remembering that at Cotec we define innovation as any change (not only technological) based on knowledge (not only scientific) that provides value (not only economic). Innovation is always desirable, but in times of uncertainty, it is essential.

Science often operates by means of doubt, trial and error… What lessons can the business world learn from this approach?

Science and business have more in common than meets the eye. In both activities, the greatest advantage is gained by exploring unfamiliar territory, at the frontiers of the market and of knowledge, and in both of them, second place usually does not win a medal, which is why they are both so competitive. At the same time, the complexity and the scale of the effort are growing in both fields, giving an advantage to those who cooperate and collaborate. They also increasingly share the same method, which relies not only on trial and error but also on making good use of experience and intuition. Although my background is in science, my professional career has been mainly in the business world. The most important thing that my scientific training brought to my business activity is probably the need for rigor, and consistency, the importance of having very clear objectives, and the value of teamwork. This applies equally in the laboratory and in the office.

Much of the uncertainty we feel comes precisely from technological advances. What trust should we place in technology and what limits should we place on it in this context?

In regards to this, it is important to differentiate perceptions from data. I can explain it with an example. At Cotec, we have been observing the impact of automation on employment for many years. Our perception surveys say, year after year, that half of the population believes that technology will destroy more jobs than it creates, while the other half thinks just the opposite. What does the data tell us? We are told that the problem is not in the number of jobs technology destroys or creates, but in the quality of employment and job polarization. This, which we hypothesized years ago, has now been measured with data. In the more developed and automated economies, the proportion of workers in middle-wage occupations is declining relative to the two extremes of the wage distribution, the low- and high-wage jobs. In other words, the danger we face is the disappearance of the middle class. But the danger does not come from technological development, but from the lack of policies that help us take advantage of the opportunities offered by technology. A year and a half ago I personally took to the president of the Congress of Deputies more than 135,000 signatures in support of a campaign we launched in from Cotec. The #MyEmploymentMyFuture campaign was based on a video with over 2.5 million views on YouTube alone, asking parliamentarians to debate the future of employment. They have not yet listened to us, but for everyone’s sake, I hope they do not take too long because the problem is becoming more evident every day.

Cotec is, in part, a Research, Development, and Innovation (RD&I) observatory in Spain. How do you think that side of the business is getting ahead of the major risks and uncertainties we face?

The major European economies responded to the 2008 financial crisis with more investment in R&DI, while we made cutbacks. The economic recovery came but did not lead to an immediate reactivation in our commitment to knowledge, which means that we are still lagging behind the continent. According to the latest data from the INE, corresponding to 2020, although we have been growing for several consecutive years, the Spanish public sector has not yet returned to pre-crisis levels of investment and employment in R&D, unlike the private sector. All this will change with the arrival of European funds, provided that we are up to the task of managing and executing them, which is something that also raises doubts. Without deep structural change, European funds can be, as the saying goes, bread for today and hunger for tomorrow. Saw-toothed trends are very bad for knowledge. And of course, in our country, a historic challenge is still pending, which is public-private collaboration, an issue that is of great concern to us at Cotec.

How do you think the current economic uncertainty will affect companies’ R&D investment?

In the INE data for 2020, the latest available, Spanish companies accumulated six consecutive years of growth. The private sector invested just over €8.8 billion in R&D that year, 9% more than the pre-crisis peak of 2008, and employed over 100,000 people, almost 14% more than the pre-crisis peak of 2010. We will see what the INE figures for 2021 tell us in November, but it is very likely that the negative impact of the pandemic will be more than offset by the fact that last year was the first year in which the European Next Generation EU funds were implemented. At Cotec we have our own model to anticipate official data and predict the evolution of R&D investment in Spain. We have developed it with the help of Ceprede (Economic Forecasting Center) and Eva Senra, professor of Economics at the University of Alcalá, who is also a member of the Cotec 100 network of experts. Our leading indicator says that R&D investment by actors in the Spanish economy grew by nearly 8% in 2021. If this is confirmed, it will be the first time that we exceed €16 billion per year in the pursuit of knowledge. In fact, the model forecasts investments of close to 17 billion, exceeding 2020 by 1 billion. This, of course, also includes the private sector. To understand this very positive forecast in a year marked by the pandemic and uncertainties, it is important to mention again the European funds. Another piece of information that we analyzed in the Cotec Report: One of the indicators that helped us build the forecasting model is the number of Social Security affiliates employed in R&D-related jobs. Last September there were more than 107,000 people, 8,000 more than a year earlier and 15,000 more than before the pandemic. It is very significant, for example, that the evolution of employment in the R&D sector exceeds that of the service sector as a whole.

Recently, Cotec has also been reflecting on education and its links to innovation. How can education prepare us for times dominated by volatility and digitization?

Education has been a priority area for Cotec since 2015 when I assumed the chair. We are equally concerned about educating in innovation and innovating in education. The ultimate mission of education is not to prepare us to face a given context, in fact, if we keep that mentality, which is the current one, we will always arrive late, because education works in the long term, and by the time a person finishes his or her training, the context has changed so much that it has become outdated, as is happening. The mission of education, the way to prepare us for any future, and even more so for the one that is now on the horizon, marked by automation and volatility, is to offer basic tools to make the most of our human capabilities: critical thinking, teamwork, empathy, transversal application of knowledge, leadership… In other words, the opposite of what we have been doing for decades, which has been to prepare ourselves to compete with machines in those areas where we are already incapable of surpassing them, such as calculation, repetitive tasks, or dangerous activities. It is now key to enhance what distinguishes us as humans, in which robots and algorithms will never surpass us. It is also important that education helps us close social gaps and guarantee equal opportunities, not only for social justice but also because talent does not conform to postal districts or social classes and we cannot waste it. We cannot lose a future medical, business, medical, artistic, or political talent just because he or she does not receive adequate training.

In terms of talent and new ways of working. What doubts remain and what innovations do you think will take hold?

This year we have presented two independent studies that answer this question to a large extent, one in collaboration with Complutense University and the other with the ISEAK Foundation. Both studies analyzed the Spanish labor market over the last twenty years and reached complementary conclusions. The study with Complutense University shows that since the beginning of the century net employment has increased in low and high-wage occupations, but not in the middle-wage brackets. The researchers showed that jobs related to repetitive or predictable and therefore easily automated tasks are mainly disappearing. The bottom line is that the new economy rewards higher-educated workers, displace workers with intermediate education to lower-paying jobs, and greatly reduces the presence of uneducated workers in the labor market. The ISEAK study describes the skills and occupations most in demand in the Spanish labor market and how they have evolved over the last two decades. The findings reveal growth in all computer occupations, while most manufacturing jobs are in decline. In parallel, all caregiving professions and the vast majority of scientific and intellectual professions are booming, some with record growth, such as mathematicians and statisticians, whose demand has increased tenfold. An interesting conclusion, in which the two papers coincide, has to do with gender: women, particularly young women, are better prepared than men to meet the challenge of a more automated economy. There are two reasons for this: one, that has had it harder so far, they have prepared themselves more and better, and the other, that they have had to accept low-skilled and low-paid jobs that are now, however, beginning to boom. In short, the future will require a great deal of personal retraining and adaptation, accompanied by public policies on education, employment, and innovation to facilitate this transition, and by the commitment and flexibility of social agents.

Finally, you also have experience in the creation of companies in high-value sectors, such as biotechnology. Does the entrepreneur always operate in uncertainty or are these particularly complex times for someone who wants to become an entrepreneur?

Complex times, such as the present, are the best times for entrepreneurs, I think both for those who achieve their goals as well as those who fail. I return to the example of the vaccine. The greatest challenge to humanity in decades has also been the greatest success in innovation and an extraordinary business for the first movers. It is true that history is only told by the winners, and that many more have invested countless personal and economic resources without achieving success, which is reserved for very few privileged ones. But even for those who didn’t make it to the finish line, the effort will have been worth it, because they will undoubtedly now know much more than they did before when tackling their next project. We all benefit from this exponential increase in competition in a knowledge-based society and economy.

Jose Antonio Llorente
Founding Partner and Chairman of LLYC Spain / U.S.A.
Jose Antonio Llorente as a specialist in Corporate and Financial Communication, over the course of a career spanning more than 25 years, he has provided consultancy services on numerous corporate transactions: mergers, acquisitions, divestments, joint ventures and stock market floatations. Mr. Llorente was the first Spanish professional to have received the SABRE Award for Outstanding Individual Achievement, a European award presented by The Holmes Report.Mr. Llorente worked at the multinational Burson-Marsteller for ten years, where he was Managing Director. He currently sits on the Board of Trustees of the Euroamérica Foundation and the Steering Committee of the Spanish Association of Minority Shareholders of Listed Companies. He is also a member of the Advisory Council to SMEs of the Spanish Confederation of Small- and Medium-Sized Enterprises, the Steering Committee of the Agencies of Spain Association and the Advisory Council of Executive MBA in the Management of Professional Services Organisations organised by Garrigues. José Antonio has a degree in Information Sciences from the Complutense University of Madrid, and specialist in Public Affairs at Indiana University of Pennsylvania and The Henley College. @jallorente [United States - Spain]
Cristina Garmendia
Chairwoman of the COTEC Foundation for Innovation
Degree and Ph.D. in Biological Sciences and MBA from IESE Business School. She was Minister of Science and Innovation of the Government of Spain. After leaving the government, she resumed her responsibilities in the companies she founded, Ysios and Genetrix. She also chairs the Spanish-German biotech company Expedeon AG and the Spanish-American company Satlantis Microsats. She is president of the COTEC Foundation and sits on several advisory boards of universities and business administration. She is an advisor to the European Commission as a member of the High-Level Group (HLG), which has formulated the recommendations for the design of the 9th Framework Program (2021-2026) of the European Union. Her work and entrepreneurial vision have been recognized on several occasions with awards for research and business innovation.

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