Tuesday, November 11, 2008

Keep on Bailing, or Invest in Innovation?

Thermo Fisher chairman Jim Manzi and James Henry have an article in The Nation titled 'Invest in Innovation.' Well worth a read.

"For more than a century America has led the world in innovation," they write. "This has been true not only in science and technology but also in business management practices, the design of new approaches to service delivery, political institutions and civil rights. ...But if the United Stakes stakes its future on resource-based competition--the kind of low-innovation, 'big houses/big debts/big cars' model favored by automakers, Wall Street and the oil industry...[our long-term] competitive advantage shifts to countries with the largest supply of cheap resources, the lowest taxes and the cheapest, most oppressed workers--not a formula for vibrant democracies either at home or abroad."

One recommendation is to create more innovation hubs like Boston and Silicon Valley. Henry and Manzi write:

    Take a lesson from successful public-private collaborations in technology hubs like Silicon Valley, Boston and Austin. In all these cases, private venture capital and entrepreneurs played crucial roles--and so did federal dollars. For decades the federal government generously subsidized basic research in fields like engineering, biology, physics, chemistry and computer science at premier universities like MIT, Harvard, Stanford, Carnegie Mellon and the University of Texas.

    ...The question is whether we can replicate innovative new Bostons and Silicon Valleys in other geographies, focused on energy, healthcare, the environment, education and transportation.

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Anonymous Anonymous said...

Great point, surprisingly this is the first time I have really read an article on this point.

November 12, 2008 9:06 AM  
Blogger Don said...

Investing In Competitive Innovation
Don McLagan, November, 2008

I want to support Mr. Henry’s and Mr. Manzi’s “Invest In Innovation” article in The Nation with four case examples from my own experience. Their article makes the case for government investment and incentives for innovation-based competition. In 1968, I worked in the office of the Secretary of Defense. My job was to use the most advanced computer technology to support the Secretary – at that time Robert McNamara. Looking back forty years later, these examples demonstrate the significant long term success which can result from government encouraged innovation.

1. In 1968, a revolutionary timesharing technology was making access to mainframe computers available to remote users. The Defense Advanced Research Projects Agency (DARPA) had contracted with Systems Development Corporation (SDC) in Santa Monica to develop and provide access to their timeshared Q-32 computer. Through a teletypewriter terminal (yes, the kind with yellow rolls of paper,) an acoustic coupler for networking, and Fortran programs, I was able to build and operate a computer model of DOD’s escalating costs. I believe a version of this model is still being used. Today after the mini-computer revolution, the PC revolution and the Internet revolution, we are in the early stages of cloud computing which has its antecedents in the time shared computing of forty years ago.

2. The Anti-War movement was gaining its voice. Secretary McNamara was under assault fom students, the press and increasingly from Congress. Every word he spoke was scrutinized and often used against him. The Secretary asked if technology could help him identify the context of all the public statements he had ever made – for example, had he ever mentioned “nuclear weapons” in the same speech as “Vietnam?” An Ohio company called Data Central was creating a new full text search and retrieval software system. Our office funded a $250,000 contract with Data Central to fully index every word from every McNamara speech. With the profit from this contract, Data Central invested to index all the case law of Ohio and then went on to create Lexis and Nexis.

3. 1968 would be the deadliest year of the war for American servicemen, with more than 16,000 war deaths. Congressional representatives wanted to know “How many black soldiers from my district died this week?” SDC, with the support of DARPA, was the source of an innovative technology solution again – in this case, one of the first fully inverted database management systems. We used it for the grisly task of maintaining the body count. Later Oracle, would use this same fully inverted database technology to create a $20 billion company.

4. The fourth information initiative was a 1968 DARPA project run by Larry Roberts at Lincoln Labs. He published a request for quotation (RFQ) to create a packet switching network to join SDC’s Q-32 computer in Santa Monica with the Project Genie machine at Berkley and the Multics computer at MIT. 140 requests were sent out for quotations. Wikipedia reports that, “Most regarded the proposal as outlandish, and only 12 companies submitted bids.” In the end, Bolt, Baranek and Newman was chosen to create ARPANet – and the Internet was born.

In all four of these cases, our government used and encouraged innovative technologies. In each case, the resulting innovation successes was significantly greater than the government’s early investment. Government support of innovation is legitimate and these four stories show that it can produce significant and lasting returns.

November 14, 2008 9:50 AM  
Blogger jlbrown said...

Really great points, Don. It's too bad that we've been socially-engineered to think that looking at past history isn't productive, isn't "cool" or is unpatriotic.

November 16, 2008 8:06 AM  

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