Guest Column
21st Century Innovation
- By Ing. Karl A. Rüggeberg
- Associate Director of Paramount BioCapital, Inc.
- Treasurer and Member of FUMEC Board of Governors
(Second of a two-part article)
Faced with the challenges and opportunities that the changing nature of innovation at the dawn of the 21st century represent and which were covered in our previous article, we now turn to the specific recommendations set forth by the National Innovation Initiative (NII) to secure America’s scientific and technological leadership in years to come.
Talent. This key innovative asset calls for an urgent build-up of the nation’s base of scientists and engineers. Notwithstanding the growing demand/supply imbalance for scientists and engineers, fewer Americans are pursuing such careers. The pool of foreign students in these areas is also shrinking due to abundant opportunities in their own countries and more stringent U.S. immigration laws.
Talent can be readily grown and harvested in an innovation-oriented culture and universities must play a decisive role in promoting such an environment while continuing their commitment to expand the frontiers of knowledge. Therefore, academic institutions should not only enhance their capabilities for cross-disciplinary research and education, but for translating new ideas into commercial applications as well.
In empowering U.S. workers to succeed in an increasingly competitive global economy, the NII urges improving training and lifelong education through the establishment of a national policy of voluntary individual asset accounts that allow tax exempt contributions by employees and tax credits for employer contributions.
Investment. To keep feeding America’s great innovation economy, robust investments in research becomes paramount. Research, particularly in the physical sciences has spawned the transistor, fiber optics, integrated circuits, wireless communication, liquid crystal displays, lasers, the Web, the GPs, hybrid automobiles, and numerous medical technologies. However, aside from federal funding for the life sciences having increased four-fold since the 1980’s, growth in the physical sciences, engineering and mathematics has been stagnant in constant dollars.
An interesting phenomenon is that innovation is inherently regional, that is, it occurs in geographic locations (i.e. Silicon Valley, Route 128/Boston and Greater Austin) where the effective linkage of intellectual, financial and human capital turns novel ideas into new products and technologies. Therefore, in order to energize the entrepreneurial economy and accelerate the innovation process, the NII proposes the establishment across the U.S. of at least ten more regional Innovation Hot Spots in the next five years. State and local economic development entities and academic institutions would raise matching funds and develop plans to operate these pilot innovation centers.
Most U.S. regions have enough investment capital, but they often lack the proper conduits to direct such capital to new business ventures. To address this problem, angel investor networks and local charitable foundations should become part of every region’s innovation strategy.
America’s productivity gains over the past decade have outstripped those of other countries. It is argued that innovations play an important role, but key in the quick adaptation of productivity improvements is U.S. capital markets that fund major companies and upstarts alike.
In fact, recommended actions call for corporate boards of directors to implement incentive and compensation systems that encourage long-term value creation and innovation. On the subject of intangibles, industry should initiate a voluntary disclosure of intellectual capital, innovation performance and indicators of expected future value, as it is especially important for knowledge-intensive companies to reflect more accurately the value of their intangible assets.
Infrastructure. The NII lays out four policy and physical infrastructure proposals, the first of which is to create a national consensus for supporting innovation growth strategies that encompasses an explicit national innovative strategy and agenda led by the President, a public-private sector partnership to advocate for national initiatives, and new metrics to monitor national innovation performance, among other measures.
The second initiative is geared towards the creation of a 21st Century intellectual property regime that builds quality in the patent process, utilizes patent databases as innovation tools and creates best practices for collaborative standard setting.
The third initiative’s goal is to strengthen America’s manufacturing capacity, as recent manufacturing strategies of cost control, “total quality” and continuous productivity improvement are being superseded by a new business model that integrates services, design and manufacturing stages in spatially dispersed networks of plants, affiliates, and suppliers, which in turn forces business processes to rely increasingly on software, communication technologies and an expanding array of computing devices and sensors.
The fourth and final goal is to build an integrated healthcare system in the U.S. by the end of the decade. To this end, the federal government and industry must set strategic goals.
As one can infer from this brief summary, many of the proposals considered for the United States to promote innovation can apply to other countries in their quest to participate in the new global economy.
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