America and Innovation in the 21st Century

For over 20 years, I have been actively involved in US public policy matters in a variety of roles.  In the mid 1980s, for example, I helped found the Computer Science and Telecommunications Board (CSTB) which is part of the National Academies, and served as a member of the board until 1989.  From 1997 to 2001 I was a member of PITAC, the President's Information Technology Advisory Committee, and served as its co-chair from 1999 to 2001.  From time to time, I like to go to Washington to meet with people in various parts of government and discuss a variety of issues.

So, on a very hot summer day last week, I went to Washington to talk about innovation, science and technology strategy, and related public policy matters.  I talked to a number of staff members in Congress and the Administration.  I used the themes I have been using in recent talks,  that I believe we are at the onset of a technology-based business process revolution that could have the impact on the 21st century that the Industrial Revolution had on the previous 250 years.   "Business Process Revolution" may not be the right name, but that is beside the point.  The key point is that this revolution, whatever historians end up calling it, will have a huge impact on all aspects of business, society and our personal lives, and it will both drive and be driven by innovation in hyper-drive, as was the case with the Industrial Revolution.

Everyone listened to me politely, some agreeing with me, others I presume wondering what in the world I was talking about.  But a question kept coming up over and over, one that seems to be everywhere, not just in Washington.  How do we know that America can still be an innovation leader in the 21st century, especially when you look at what is happening in China, India and other parts of the world?  There seems to be a kind of foreboding in the air, a sense that "Perhaps we've lost it."

I have seen this movie before.  Sometime around 1988-89, the CSTB organized a workshop on competitiveness at the beautiful National Academy building in Washington across the street from the Lincoln and Vietnam memorials.  I remember some speakers saying that it was really good that the US was strong in agriculture because, being no longer any good in manufacturing,  we could at least trade rice and oranges to Japan and Germany for the cars, TVs and other goods that we could no longer make ourselves.  In the 1980s, Japan and Germany were the China and India of today.  Without minimizing the continuing strength of Japan and Germany in many areas, it is fair to say that the future did not play out the way many back then said it would.  For example, in short order the Internet came along, then the dot com bubble came along, and here we are talking about the potential for a historic business process revolution.

Handicapping the global economic horserace is not only impossible, but in the end, it's not the issue. The important point is that the changes we are experiencing today are really, really complicated, and we have no idea where they will take us.  Complex systems -- organizations, communities or economies that are composed of large numbers of rapidly changing, highly interrelated components -- become essentially unpredictable or emergent.

At such times, you definitely need the best knowledge available.  Technical talent is more important than ever, so you need to invest in R&D, you need substantial skills in science and engineering, and you need a highly educated population, all of which are issues that the US -- or any nation -- needs to address.  (See the excellent testimony that Nick Donofrio recently gave at a hearing on US innovation challenges before the House Science Committee.)

But even more important than what you know is your capacity to adapt. We have to keep in mind that America has some incredible strengths that will continue to serve us really well in the world we are moving into. When facing something very complicated and unpredictable, you need a highly flexible society that will quickly absorb and adapt to changes be they political, economic or social.  The fact that our society is deeply grounded in democratic institutions, free market principles and respect for diversity bodes very well for America's future as a center of innovation.

We have a lot to do and we could still blow it, but frankly I do believe that we are moving into this very exciting and unpredictable future from a position of considerable strength.

Comments

[Jack Mason]

Irving:

It's encouraging to note that the challenges of reinvigorating America's capacity to innovate are getting wider hearing these days.

As the National Innnovation Initiative's report (see www.compete.org) concluded last year, encouraging young Americans to pursue science and engineering careers is a genuine priority.

But it raises a dilemma as well: where are all the jobs for this next generation of technical innovators? Perhaps demand will catch up with supply, but hasn't part of the problem been that the attractiveness of science and engineering careers (at least for U.S. students) has declined because of a contraction in career opportunities and flattening out of salaries?

It seems that new frontiers like nanotechnology, bioinformatics and energy technologies may fuel imaginations and interest among the current generation of college and graduate students. However, there seems to be little indication that the oft-cited national need for high-level technology expertise is translating into the kind of market pull of job opportunities that would shape young Americans' decisions to pursue careers at the front edge of engineering and science....especially when so much media coverage points to the millions of young people in China, India and elsewhere in the emerging world who are becoming scientists, software engineers, etc.

Wouldn't the greatest encouragement for more homegrown scientists and engineers be more evident in the market? We've heard about shortages of nurses, for example. Is it just that the actual U.S. market demand is underreported?

[Richard Schwartz]

In addressing the need for more scientists and engineers, I think it is important to challenge some conventional wisdom. The demography of the US has changed and is continuing in the direction of longer live, and longer careers. Tradition -- and experience -- tells us that a wee need to continually infuse talented young engineers and scientists into the workforce in order to sustain an innovative edge. I do not argue the wisdom of this, and of course microeconomics favors this approach as "young" equates to "entry level" equates to lower salaries. I strongly believe, however, that macroeconomic factors (driven by the demographic change) dictate that we must depart from tradition and experience a bit.

I am not saying that we shouldn't train lots of new talented engineers and scientists. Of course we should, but we should also look at mid-career professionals as an alternative source for this continuing infusion. We need to do this at a far greater level than tradition and experience have had us do in the past.

Mr. Donofrio testified, "To advance technology expertise, I am convinced that education must be transformed and realigned to prepare students to become innovators." This is all well and good, but I say that there's an equally important, co-requisite transformation that must occur. Education and business together must be transformed and realigned to make our existing professional workforce into students!

That's far more important, IMHO, than the point that Mr. Donofrio continued on to shortly thereafter in his testimony, that "we need national immigration policies that enable the United States to attract and retain the best minds in the world." Immigration is too short-term, and too short-sighted a solution, and it is not sustainable enough over the long haul to be anything more than a very small part of a national strategy for innovation and competitiveness.

[Paul Richard]

I agree with the need to attract new talent, but I also feel that the existing workers need to be 'enticed' to stay in the workforce. As you go further in your career the quality of life becomes more important and HR policies need to adjust to reflect that.

The increased use of telecomuting is a benefit but it needs to go further. From discussions with co-workers it would be a big incentive to take the off-shift work if something could be worked with HR to permit a stay in another country. Maintaining the US reporting chain and pay, but a short stay that is arranged and paid for by the worker. HR systems would need to track stays in various countries as tax implications kick in after x number of days depending on the country. But being able to work daylight hours on a night shift, is a huge quality of life benefit.

Companies also need to address the annual pay raise. While pay raises are always welcome, why not offer an alternative. During reviews give the manager the option of percentage pay raise or x days added vacation. Or even an extra level of health care.

These are just a couple of HR policies that should be considered by all businesses to entice their mid-career and end of career employees to stay on longer.

[Irving Wladawsky-Berger]

I think that throughout these comments what we are hearing is a need for increased flexiblity across the board, including the kinds of jobs people do, in the education they get throughout their careers to adapt to changing conditions, in the way they can personalize their working environement, and so on.

I could not agree more. I believe that it is a fact that there is an increasing gap between the earnings of educated and non-educated people. This should not surprise us in a "knowledge economy." But, given how fast things are changing, education should be not so much learning a specific skill, but almost a "learn to learn, " as people will have to keep learning new skills throughout their working lives.

I also think that "science and engineering" are increasingly covering more and more careers. As IT now permeates so many disciplines, you need at least a base knowledge of science and engineering in lots of jobs in health care, entertainment, finance, and so many others. I really believe that being literate in technology and basic scientific reasoning will serve everyone well as we go into this fast changing and unpredictable future.

[Vincenzo Graziano]

I agree with Peter Richard when he says “the existing workers need to be 'enticed' to stay in the workforce”. There are probably hundreds of HR policies that can make this possible. What I would like to hear more is the word “values”. People live by values. Do company live by values? I think that economic organisations are now playing a strong role in the social, cultural and economic changes of society. When my grandfather left Italy to open a restaurant in America, after the II world war, many people like him felt that their dreams could come true in the States. I think that social capital and values were America’s competitive advantage. When you believe in dreams you can go really far. Long time ago we could expect that political beliefs inspired those dreams. Nowadays this would not be realistic. Economic organisations can do! Commitment to dreams is the only difference between western countries and China. I can reckon this in my Chinese friends’ eyes. They dream a great country they are building all together. No nation can be great when only well-off people have the right to dream a better life. In the knowledge economy, where economic success depends on people's capacity to develop and create new ideas, everyone should have same access to knowledge. Rome declined when people sopped living by values. We should not forget the lessons coming from history.

[Stephen Perelgut]

I find commentaries like this blog to be useful and heartening. I recently returned from a conference that looked at the decreasing number of students enrolling in computing disciplines at universities. In fact, the conference was primarily focused on the very steep decrease in women.

There was a surge in enrollments during the dotcom bubble and this kept numbers high through the 2001-2 academic year. Currently, enrollments across North America are down as much as 70% from those peak years and may be lower than any time since 1980. Furthermore, women once represented 34% of computing students and represented 24-26% as recently as 2002 but, when you talk to department chairs, they'll answer off-the-record that women represent 15% and maybe fewer.

So, where 100 students would be entering their final year of an undergraduate degree in computing, four years from now there will only be 30. And, where 25 women will stand in cap and gown this coming May, we'll see only 4 or 5 come 2008 - and maybe fewer.

Many of these students have fled to other sciences but a sizeable minority have left scientific fields altogether. And the "hard sciences" (physics, inorganic chemistry, etc.) appear to be showing similar trends.

This is not a North American story - the same patterns are appearing in Western Europe and, reportedly, in almost every western culture. China and India continue to grow their own programs that are keeping numbers high and growing (although there are plenty of diversity concerns rising in those countries).

Investing in R&D is fine, but we need to increase our visible, highly vocal support of sciences, particularly information sciences.

(My job is managing overall university relations for IBM within Canada but the opinions expressed above are my own.)

[Christopher]

I'm particularly energized to come across the postings on Networks and collaborative models of innovation. As a candidate pursuing a Master's Degree in Science and Technology Policy, I've become increasingly convinced that the dynamic and organic approaches that evolutionary economics propose are much more fitting to the realities that characterize contemporary economic and industrial paradigms than previous neoclassical models.

If we accept that networks as the "dominant sociotechnical paradigm" (to quote two innovation scholars, R. Rycroft and D. Kash), then indeed, as Irving notes, the firm's place as the driver of innovation is called into question.

Historically, individual firms were able to create and maintain the compartmentalized knowledge necessary to innovate their specific product or service. In large part, because sector lines were much more sharply drawn, firms could compete simply by developing their own area of expertise. The very complexity of present-day science and technology make such a model untenable. Increased inter-dependence and cross-fertilization of knowledge means that firms are no longer able to keep up with the needed knowledge on their own. By way of example, I suspect that IBM's own work on supercomputing to better understand human neurological processes (discussed in a Technology Review article this month)attests in no small way to this new paradigm.

To get to policy implications, I would add that, historically, policy makers were able to rely on relatively slow and predictable paths of innovation. The complexity of both contemporary technologies and processes of innovation has rendered government inadequately prepared not only to react to the complexity of such scientific and technological advance, but, equally as important, to anticipate and support the very innovation necessary for economic growth and competitiveness at the global level.

[Irving Wladawsky-Berger]

Christopher, I think that the biggest shift that every company as well as governments needs to get used to is that innovation will increasingly happen via a mix of open and proprietary work.

This is frankly not all that new, as the research communities have been operating in this mode for a long time. The majority of advances in medicine, pharmaceuticals, semiconductors, and similar areas are done via open research, in universities, government labs, and research centers in the private sector. Then individual companies compete to put the research to practice, and bring products to market in a proprietary way.

What is new is that this research model is now coming to software, business processes, business models and a number of other areas where, as you point out, individual firms innovated in isolation and tried to then establish control points, that if succesful, would give them a monopoly, at least for a while. That model is now giving way so that now, pretty much across the board, innovation will be this balance of open and proprietary.