Futurologist Peter Cochrane says SMEs will drive businesses b ecause of their ability to adapt to changes in the marketplace, writes Gabrielle Monaghan

Small and medium-sized enterprises (SMEs) will increasingly be responsible for the world's innovations because of their ability to adapt to changes in the marketplace faster than their larger counterparts, according to Peter Cochrane, one of the world's best-known "futurologists".

Testament to this is the way successful small companies are being snapped up by multinationals such as Google, Cochrane says. The search engine giant is acquiring modest firms with a niche expertise to help build on Google's core business rather than strike into new frontiers. In the two years since it went public, Google has bought at least 15 enterprises, including Dodgeball.com and Zipdash, which provide, respectively, a social networking service and traffic information for mobile customers.

"By and large, all big companies are like lumbering dinosaurs," Cochrane says. "SMEs are very agile - they can change quickly. A lot of the innovation that's happening now is heading towards SMEs. That's why big companies like Intel and Cisco are buying SMEs - it's cheaper to wait for an SME to innovate rather than doing it themselves." Cochrane should know.

Since leaving BT, where he was chief technologist, the all-round consultant and guru has been involved in the creation of new technologies as well as the formation of 20 new businesses, including online travel agent eBookers.

The 60 year old has received an OBE for his contribution to international communications, and became the UK's first professor for Public Understanding of Science and Technology.

Cochrane is always thinking about the latest trends in technology and how they will affect our lives and his New York-based company, Concept Labs, which he helped form in 2000, is dedicated to the creation of new, "paradigm-changing" technologies, companies and markets.

Cochrane has written more than 600 papers and articles on business, management, and technology, as well as numerous books, his latest being Uncommon Sense: More Tips for Time Travellers. The book explains how simple analysis allows the prediction of such debacles as the 3G auction and the subsequent collapse of an industry, but shows that simple-minded thinking is dangerous in a world that is chaotic and out of control.

He successfully predicted how the world would move towards e-working, the rise of email and text messaging, and how the dotcom industry would mirror the boom and bust cycle of the industrial revolution.

Cochrane forecasted the use and growth of mobile devices and communication, iris scanners, and fingerprint readers - all of which were seen as unlikely at the time. At BT, he was responsible for manufacturing programmes that installed the first undersea fibre cables between the US and Europe in 1986. Cochrane, who addressed about 150 executives and stakeholders in the IT sector at a conference in Dublin yesterday, warned that SMEs in Ireland and abroad could be wiped out by one innovation, stressing the need for small businesses to keeping innovating if they're not sure their market will "last forever". "For example, take an SME that is making parts for the motor industry," Cochrane says. "Automobile manufacturers assemble parts from SMEs everywhere. Right now, there is a huge research effort into making leather seats. Imagine if, instead of these seats needing springs and leather stitching from SMEs, there was a concept of a plastic frame and the seats were injected with moulding. The company that makes parts for the seats could be wiped out."

The futurologist believes that the Government should focus on attracting home technology and science experts who have "made it" abroad as they will have the know-how and energy to set up new companies.

"After 9-11, a lot of American industries collapsed, and they were handing out pink slips to engineers from India and China, who went home and contributed to the innovation powerhouses in India and China," Cochrane says.

"The Government needs to question where and why graduates left Ireland. A lot of the time, young people are going to migrate and go to another country because they can see an opportunity to get some experience and have a better career. But there will come a time when they've had enough and will go home to set up an SME." Cochrane believes, too, that companies will suffer if they don't embrace the changing nature of work and the value of young people's knowledge of technology. Corporate IT departments, for instance, are destined to go the same way as the typing pool, because young employees typically know more about the technology they are using than the IT department itself.

"These kids are used to networking and they don't want someone from the IT department telling them what technology to buy or use," Cochrane said. "If you don't use IT efficiently, you will be confined to your local market.

"Increasingly, all of business is international, customers are more demanding, and the only way you can respond to these demands is to automate as much as you can." Cochrane, who was christened a "futurologist" by a newspaper some 15 years ago, expects that artificial intelligence will play a much more important role in manufacturing in the West in the years ahead, though robots won't be as sophisticated as imagined by the "generation brought up on Star Wars". "The next big thing? Look out for new materials, molecular manufacturing, nano technology, and a combination of technologies as opposed to the isolation of technologies and robotics," Cochrane says.