Creating a New Frontier of Innovation

Investment in frontier research has always been the bedrock of innovation. Researchers and other technical leaders have a long and proud history of investigating uncharted terrain, of exploring areas that at first seemed daunting — even impossible — but that ultimately panned out, and opened up whole new vistas of science, value, wealth and societal progress.

 

Throughout history, extraordinary periods of achievement have been sparked by a single invention. No one dreamed in the 1940s, for example, that the esoteric field of quantum mechanics would spawn the semiconductor and information technology revolutions. Engineers working on time-sharing techniques probably never anticipated the World Wide Web and e-commerce. Scientists researching atomic motion likely did not anticipate or predict reconfigurable chips or global positioning devices.

 

It is rarely the invention itself that creates the revolution - it is the people who figured out how to apply it and, better yet, apply it in multiple and diverse ways. That's what innovation is all about - taking a great thing and making it pervasive, applying an invention in a way that literally transforms institutions, enterprises or society as a whole. From innovation, entirely new industries and markets are born - and important changes in behavior will occur.

 

The very nature of innovation is changing rapidly. Even within well-established centers of innovation, creativity is becoming much more collective and much more open. Many more people are now able to play. And markets being what they are, innovations that occur in the marketplace generate further innovations. In the process, they give rise to new industries, they spur productivity and economic growth, fuel wealth-creation, create higher-paying jobs, and raise the standard of living for everyone.

The mature economies of the world today are facing new realities that significantly challenge their capability to create and deploy innovation for prosperity and growth. We need to understand the roadblocks, and we need to recognize both the challenges and opportunities for creating a new innovation paradigm — one that enables our global society to grow our levels of prosperity while addressing society's most important needs. We simply cannot assume that established public policies are adequate for the new challenges that lie ahead.

 

The public policies that today compromise our ability to generate innovation are related to education, training, research and development, fiscal and monetary policy, intellectual property, taxation, standardization and market access. Future prosperity lies in placing innovation at the heart of those policy areas. For example, how can we optimize for innovation by protecting the rewards of intellectual property while at the same time encouraging the proliferation of open standards?

We need to do many things here. One of them is to address the growing tensions between universities and industry around the transfer of technologies. Universities should clarify that the role of technology transfer is the diffusion of knowledge, not the maximization of revenue.

 

Optimizing for innovation in the 21st century requires a balance between the protection of intellectual property and the encouragement of the open process. Intellectual property rights should not get in the way of shared innovation between business and academia. Both of those constituencies should be working together to define the skills needed by businesses and society, to develop curricula that will produce the kind of talent required, and to stem the ever-declining interest by so many young people in pursuing technical and scientific education.

 

To create the next generation of innovators, education must be fundamentally transformed and realigned. The value of higher education increases during times of change and transition. And increased innovation activities demand that we fill the world with more adequately-skilled people. This is true whether one speaks of Europe, as it faces the challenges of low population growth and decreasing enrollments in university-level science and technology programs; of the developing world, where droves of skilled young people are directly participating in the international economy for the first time; or in the United States, where the number of degrees granted in technical and scientific fields is on the decline as the population continues to grow.

 

In addition, regulatory and legal systems must be critically reexamined and optimized to better support innovation, entrepreneurship and flexibility in labor markets, while protecting society. Leaders around the world must ask themselves if they have the right balance among regulation, protection of citizens and the encouragement of entrepreneurship and investment. The responsibility to put this in place must be shared among business, government, academia, citizens and employees. It requires ground-breaking thinking among all entities.

 

The leading economies of the world are by no means exempt from this need for critical reflection. For example, in the United States publicly funded research has been steadily moving away from the frontiers of knowledge and closer to application and development. Federal research investment has grown conservative — increasingly driven by consensus, precedent and incremental approaches. U.S. federal funding in fundamental research is now at only half of its mid-1960s peak of 2 percent of GDP and — excluding spending on defense, homeland security and space — it is expected to decline in real terms over the next five years. At the same time, a short-term focus has infected business. Corporate R&D dropped nearly $8 billion in 2002, the largest single year decline since the 1950s.

 

Clearly, there are some big trends here that are troubling. In 2004 the U.S. Council on Competitiveness, an organization of more than 200 CEOs, university presidents and labor leaders, launched the National Innovation Initiative (NII) to come up with a plan to restart America's innovation engine. The NII Report was released during a December 15, 2004, summit in Washington, D.C.

 

Among its key recommendations were the development of new incentives and support for business creation, a new intellectual property regime, and a national investment plan tailored to support America's most promising areas for innovation and ensure its research competitiveness in the future.

One important caveat: As the NII team discovered, you don't create game-changing innovation simply by increasing your budget for research and development. You do it by creating an environment where innovation will flourish. And that means understanding the process of innovation — how it happens, where, by whom, and at what pace it happens — all of which are changing today in fundamental ways.

 

The old, Industrial Age model is in rapid decline. Innovation is no longer the domain primarily of individual inventors, laboring for years in isolation, then bringing out their inventions for the rest of the world to apply. It happens faster now, and diffuses much more rapidly into our everyday lives. It also tends to occur more frequently at the intersection of disciplines and sometimes drives the creation of entirely new ones — like nanobiology, network science and bioinformatics. And it is truly global. On a networked planet, there's nothing to prevent knowledge, discovery and opportunity from flowing to whatever environments are most fertile and hospitable.

 

Today, innovation is occurring at the intersections between the physical and biological sciences, math and engineering, business and the social sciences. In the IT industry alone, breakthroughs in semiconductors, wireless connectivity and data mining have pervasive application in everything from pharmaceutical and genomic research, to weather forecasting, to electric-utilities management. Without balanced funding, we cannot assure future advances in these other areas of important discovery.

 

How do we get there? The NII concludes that we must begin a new era of government-business-academic collaboration in the United States. Similar findings would apply to other countries around the world. We need to encourage more students to study science and engineering and help our workforce adapt to change. We need more funding for multi- and interdisciplinary research. We need a rededication of public monies to support novel, high-risk and exploratory research. There must be more public support across all the different fields of science.

 

The frontier is, by definition, unknown. It would be impossible for pioneers in technology, or any other discipline, who have charted new territory to justify the return on investment for their journeys. But heading out for a place you don't already know, armed with hope and an idea you deeply believe in, is at its heart about courage and about optimism. And I continue to be very optimistic about what the future will hold.