TCS Daily


An Innovation Roadmap

By Dominic Basulto - December 19, 2005 12:00 AM

On the surface, a national innovation strategy based on allocating more government funding to R&D while, at the same time, spending additional money on education in order to produce more math, science and engineering students might sound like a good idea. After all, what else can the US do to keep up with China and India?

Yet, a tit-for-tat strategy based on boosting R&D spending and producing more math and engineering graduates may not be the best approach -- not when China is on a breakneck pace to produce 1 million new engineering graduates a year by 2010. This is not to say that spending money won't help. However, as I pointed out in an earlier TCS article ("The Networked Creators"), it's time for the US to think long and hard about how to mobilize its resources most effectively in order to develop a forward-looking innovation strategy that preserves its global competitive advantage.

Other nations like Denmark, Finland and Singapore have already engaged in innovative thinking about how to compete in a rapidly-globalizing economy. Rather than competing head-to-head with China, for example, Singapore has launched a national initiative to make itself the educational and creative hub of Asia -- a place where Chinese managers can go for top-flight education in areas ranging from engineering to art and design. In Denmark, the Danish Innovation Council recently authored a 56-page paper on Denmark's future innovation strategy that was remarkable for many reasons, including the fact that it did not once mention boosting R&D spending or increasing the number of math & engineering graduates as a possible solution. Instead, the paper outlined a plan to create billion-dollar industries in areas that the Chinese could not compete, recognizing full well that Denmark is only capable of producing 2,200 new engineering graduates each year.

For the U.S., one key aspect of any strategy to compete with China and India should be overhauling the educational system to put more emphasis on innovation, creativity and design. In the global economy, the ability of a nation to be innovative will be a key driver of competitive advantage. Quite simply, innovation is the key to dealing with the complexities of globalization. A revamped educational system that emphasizes innovation and creativity would most likely look very different from the current system, which places emphasis on reading, writing and arithmetic and encourages our best graduates to become lawyers, accountants and doctors. More lawyers, doctors and accountants will not help us compete against China.

According to Daniel Pink, author of the critically-acclaimed book A Whole New Mind, the most successful nations of the 21st century will be those which are able to tap into the right-brain thinking (i.e. inventiveness and creativity) of their workforces. While the Chinese and Indians are busy cranking out left-brain engineers and accountants, the U.S. should be adopting the opposite strategy -- cranking out right-brain creative thinkers. Our best graduates would become experts in areas like design, creative problem-solving and rapid prototyping.

Since new innovation models place a premium on wide-scale collaboration and the ability to tap into knowledge at the edges of networks, the government should reward research institutions that are actively collaborating with others in a multi-disciplinary approach to problem-solving. The focus should be on the creation of alliances, clusters and networks -- not on proprietary, stand-alone research institutions. Interestingly, the Danish Innovation Council refers to these loosely-coupled organizations as "sparring networks," as if to evoke the image of top-level boxer being toughened up for a tough bout.

Across Corporate America, a number of forward-thinking corporations have already adopted a similar strategy, leading to the creation of robust networks that would have been too large or too sophisticated to have been designed from the top-down (or by a Chinese central planning commission). Eli Lilly, for example, has set up InnoCentive, a Web-based community that matches top scientists with R&D challenges without regard to geographic location. Other companies are experimenting with user-driven communities and other forms of "democratized innovation" that enables them to reach users and consumers at the edges of networks.

Finally, the U.S. should continue to embrace the incentives created by a competitive market economy, rather than relying on some form of top-down government intervention, to rescue us from China and India. For example, instead of relying on the U.S. government to pick the winning technologies of tomorrow, we should be relying on private marketplaces of investors (i.e. VC firms) to find and finance new technologies. There are many other ways that the competitive market economy can deliver innovation faster and more effectively than some broad government mandate. Consider the power of private sector innovation competitions: the Ansari X Prize competition won by Burt Rutan and the SpaceShipOne team has already opened up the era of private manned space travel decades before anyone thought it would be possible. What could be possible in other areas, ranging from pharmaceuticals to nanotechnology?

The bottom line is that the U.S. must be prepared to think about innovation in a variety of different ways and seek out ways to align current national and regional competencies with future global needs. Attempting to go toe-to-toe with China in an effort to produce ever greater numbers of engineering students is ultimately a misguided strategy. While China focuses on developing economies of scale, the U.S. should be focused on developing economies of expertise. If it does so successfully, the U.S. may be able to unlock the secret to new multi-billion-dollar industries and out-innovate its rivals in Asia.

Dominic Basulto is a frequent contributor to TCS and the Editor of the FORTUNE Business Innovation blog.
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6 Comments

How does Toyota do it?
In the long term, changing the education system to promote thinking, problem solving and collaboration will help.
But only if our industry has the market and incentive to be innovative.
GM and Ford have 'tried' to be innovative and apparently failed, if one looks at the plants being closed.
Why can't they emulate Toyota?
Answer that question and you will have the path forward.

Innovation Roadmap?
It's foolish to even think about an Innovation Roadmap. The government's best option is, as stated, get out of the way. Lower taxes, reduce paperwork, and stand back. Measuring innovation by measuring college graduates is misguided... there may be a correlation, but it's definitely not the prime cause. Innovation comes from profit... nothing more, nothing less. What little comes from academia is also for profit... it's just that the customer is typically the government and not the public.

I have a little book where I write ideas. I have about a dozen in there right now that would make nice businesses. I'd be doing one of them if I had the capital. I'm slowly saving for the day I can. I'd be saving a lot faster if the government wasn't taking 40% of my money.

It's so nice to be able to shield money from them in an IRA or 401k... wouldn't it be nicer to be able to capitalize a business with that money... without having to give 30% of it up the moment you make that choice...

Free Markets are global, not local
Remember that a truly free market entity has no loyalty or concern for the United States or any other nation -- only the interests of the owners. So our national interest is best served by creating a very strong educational environment -- grounded in the Sciences, Math, Logic, Design, etc. -- for our citizens to compete on the world stage.

This is the excuse du jour to grow government.
The article and the proponents of these programs in congress show no reasons why other nations of the world are out innovating the US or even if these reasons will matter in the future. I would put the most innovative companies in the US up against ANY. How about Microsoft, Google, Amgen, Intel, Pfizer, Proctor and Gamble, etc. These companies are EXTREMELY innovative and their long term success proves this. Success in competitive markets are much more accurate measures of innovativeness than the impressions of government employees.

So the argument for more government force and control of the lives of citizens is based on an emotional fear of falling behind someone else in “innovation”. The only justification given is that the government run education system sucks so we need government to better it and make the US more innovative.

Assuming the US is falling behind in innovation and that does matter well what can the GOV do about
Improve education? well we have spent billions and will be spending billions more on the exact area these experts admit failure. Even if extra coersion in the area of education is successful in creating more techno dudes, there is still no guarantee that they will make us more innovative as a nation.

Rewarding innovation? As if a bunch of experts can allocate resources efficiently especially for something as fuzzy as "innovation". Besides, just because you are innovative does not mean you will be successful. The article is incorrect in this regard.

There is a simple list of things to do to improve technical innovativeness:
1. Reduce regulations on taking risks and innovating. This is huge with stupid innovation and risk killing laws like Sarbanes Oxley.
2. Reduce corporate taxes. Some of this money will be retained by the companies and put back into research and development.
3. Reduce the money required to start business ventures.
4. Get rid of the other stupid business helping programs of the government, especially corporate welfare.

Not yet another scheme for revamping our education system!
Previous 'innovation' in education resulted in such failed concepts as whole language reading instruction that treats written english words as if they were chinese ideograms. Why does anyone think that it would be any different this time. The people who will be in charge will still be the NEA and the Ed. schools. Without a solid grounding in reading, writing and math, there is no way anyone can be technologically creative. I would like someone to explain to me how a po****tion drawn primarily from the bottom quartile of college students (otherwise known as K-12 teachers)are supposed to teach the top 1 or 2% of their students how to be creative.

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