Competition, Innovation Driving Success in Hi-tech Industry – Lessons for U.S. Economic Recovery

By Rich Cooper, Vice President, Research & Emerging Issues

There was a time when videogames were relegated to arcades and movie theaters. For 25 cents, a frog hopped through traffic and a giant ape tossed barrels down a ramp. Today’s games look more like Hollywood blockbusters, accessible with a diverse array of hi-tech, wireless devices. Indeed, the videogame industry – currently worth about $25 billion – has changed dramatically, growing five-fold over the last decade, and it is appealing to an audience wider than adolescent boys with a weekly allowance burning a hole in their pocket.

Affordable, broadband-connected computers and wireless devices have upended the gaming industry, spelling challenges for those unable to adapt to the digital world and opportunities for those who can. On September 22, the National Chamber Foundation hosted a program as part of its CEO Leadership Series with a speech from John Riccitiello, Chief Executive Officer of Electronic Arts (EA). Riccitiello offered valuable remarks on what it took for EA – an interactive entertainment software company – to survive and prosper in the tumultuous, dynamic videogame industry.

Congressman Kevin Brady – co-chair of the Congressional Caucus for Competitiveness in Entertainment Technology (E-Tech Caucus) – noted in his introduction to Riccitiello that “Technology is a tough mistress, it can work for you and work against you.”

This is evident, given the upheaval in the newspaper, television and other industries grappling with how to succeed in a changing digital environment. The transformation of the entertainment industry threatens the giants of years past, including major videogame companies. Meanwhile, Riccitiello led EA to nearly $800 million in revenue, and he attributes the company’s success to embracing change and capitalizing on it.

“We put the company back on track by embracing the very thing that threatened us,” said Riccitiello. “We ran straight toward the thing that was threatening our comfortable market share – social networks, smart phones and tablets.”

The tech industry is in a continual cycle of construction, destruction, and reconstruction. With new capabilities and demands, some companies go under, only to be replaced with new companies better able to act and respond to the hi-tech environment. Riccitiello noted that this is not only healthy, it’s fundamental for survival.

“We embrace disruption,” he said, “because with disruption comes the opportunity to be bigger and better.”

Building a Skilled Labor Force

Lessons learned from these experiences offer insight for America’s wider challenge of rebuilding its economy. Companies can prosper by aggressively engaging economic threats, meeting the challenge head on. This kind of success, however, is only achievable if companies have access to the high-skilled workforce needed on challenging projects. With a 9.1 percent unemployment rate in August, much of the country is thinking one thing: jobs, jobs, jobs. The challenge is not simply to put America back to work but to ensure the available workforce holds the skills and knowledge needed to work and compete in emerging and technical industries.

Riccitiello noted three primary points for improving American competitiveness in the global economy:

  1. Give American businesses access to the world’s best talent by offering residency to graduates from U.S. colleges and universities;
  2. Help America’s younger generations acquire the quantitative and STEM (Science, Technology, Engineering and Math) skills that will allow them to compete for the best jobs and satisfy our domestic need for skilled labor; and,
  3. Use U.S. tax policies to attract and create jobs in America.

In the 21st century, U.S. companies compete directly with foreign companies. Our private sector must have access to a workforce armed with the knowledge and skills needed to succeed in a globalized economy. Teaching America’s young people is a priority, but while they study, we also need to build a high-skilled American workforce, part of which includes attracting and retaining talent from abroad.

Riccitiello highlighted Congressman Jeff Flake’s STAPLE Act, a bill that would offer permanent residency to foreign citizens who earn a Ph.D. in science, technology, engineering or mathematics from a U.S. school. In our current economic struggles, this idea and others deserve immediate attention. America’s ability to compete internationally necessitates action.

Immigration and America’s Economic Recovery

To foster the ongoing immigration debate, the National Chamber Foundation will host a half-day Business Horizon Series symposium on September 28, “Immigration & American Competitiveness: The Challenge Ahead.” New York City Mayor Michael Bloomberg will deliver the keynote address, and American business community leaders and public figures will discuss the economic imperative for reforming America’s high-skilled immigration system.

Panelists include:

The program will begin at 8:45 a.m., Wednesday, September 28. You can register in advance online to attend or watch the live feed on the U.S. Chamber website. Please join us for this important discussion as we seek answers and insight to the United States’ immigration challenges.

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