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Responding to the RFI on the Strategy for American Innovation

 

Earlier this month, I posted an item on the Commerce Department’s Request for Information on Administration’s Strategy for American Innovation.  I made some comments when the document first come out.  But, as I noted, the RFI asks a number of questions that go beyond the framework of the strategy –  both in detail and in subject area.  In a series of postings I plan to address many of these specific areas of questions.  But first let me return to the overall framework.  

The strategy has three major components: Investing in building blocks of education, basic research and infrastructure; Promoting market-based Innovation; Catalyzing breakthroughs for national priorities.  They form a pyramid type arrangement, with basic foundations leading to market commercialization and then focusing on specific areas of special interest within that broader market framework.

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This framework is fine as far as it goes.  It is useful for tying together the Administration’s policy initiatives.  But the framework and those initiatives don’t go far enough to effectively foster innovation in the new I-Cubed Economy.

The foundation of the pyramid is call, fittingly enough, “Building Blocks.” The framework describes three basic foundations: education, R&D and infrastructure (which now divides into physical infrastructure and the “IT ecosystem”).  Each of these touch upon an important area, but are too narrow in their scope.  The first building block is “Educate the next generation with 21st century skills and create a world-class workforce.”  This focuses on activities such as improving STEM education, reforming elementary and secondary education, expanding early education, expanding access improving collage education, and strengthening community colleges.

Then, as the last sentence in the paragraph on college attainment, as almost a throwaway line, is this comment, “Finally, the Task Force on Skills for America’s Future will build and improve partnerships between businesses and educational institutions to train American workers for 21st century jobs.”  Only in this one sentence does the document even begin to hint at the needs to the vast majority of workers who won’t get college degrees.  And even this does not recognized that that there is more to this building block that just formal education — such as life-long learning.

Rather than focus on “education” or even the broader concept of life-long learning, I suggest the strategy should take a step back and look at the intangible asset involved.  The building block is developing and utilizing human capital.  Education — and especially formal institutional degree-granting education — is only one part of that process.  A broader view is needed.

The next building block is fundamental research.  The document talks about boost spending at universities, federal labs and industrial laboratories.  Again, basic research is an important part of this building block.  But it is only one part.  There is more needed in the research endeavor to create of new technologies.  And innovation is more than new technologies — a point we will return to later.  Again, stepping back, the intangible asset is the creation, dissemination and utilization of knowledge.

The final building block is infrastructure — which the most recent document breaks into investing in physical infrastructure and the IT ecosystem.  Both of these are critical.   But, as research has shown over and over again, much of the gain from IT comes from accompanying organizational and institutional shifts.  Nothing in the document speaks to the need to include the organizational (intangible) infrastructure.

The next level of the pyramid is “Market Based Innovation.”  Much of this focuses on getting the “business climate” policies correct in intellectual property rights, competition policy, international trade, spectrum auctions, corporate taxation, and regulatory law. There are numerous good programs and initiatives cited here. 

But the innovation ecosystem is more than just creating the climate.  It includes creating various forms of incentives and assistance.  The strategy recognizes this with the Startup America and Regional Cluster initiatives.  More can be done in this area, especially in the key area of  incentives to cooperate.  For example, the R&E tax credit could be modified to encourage cooperative activities.  I was also surprised that the strategy is silent on strengthening the SBIR program.  The program is mentioned as part of one of the successful case studies — but not included in the policy activities and initiatives.

Likewise, there is little discussion of how other areas — such as regulatory policy and procurement policy — can be used to create incentives for innovation.  The next level of the pyramid does talk about using energy standards to foster innovation – but this section treats regulations as a barrier to innovation.

Finally on this area, the strategy contains a large missing component.  Innovation is also more than technology development.  It is also more than start-ups and entrepreneurship.  The strategy needs to embrace a broader vision on innovation and an explicit recognition of the goal of helping existing companies become more innovative and productive.  Other than promoting exports, there are few parts of the strategy that are geared toward helping established companies grow.

The top level of the pyramid is “Breakthroughs for National Priorities.”  This section outlines a number of priority technology projects.  It is a wonderful statement of how technology can be used in key areas.  It is also an important, if implicit, statement of how these technology project can have a dual purposed of spurring technological advances for both economic competitiveness reasons and for specific meeting important national needs. 

However, it is a statement of technology policy, not a statement of innovation policy.  There is nothing about how non-technology projects can contribute to innovation in general and to the specific goals of innovation in the priority areas of energy, health and education.  In addition, while harnessing technology is important, reaching national priorities will require more than just strategic investments in key technology areas.

Thus, the strategy document is a wonderful compendium of important Administration initiatives.  But it leaves out other important components needed if it is to be a full-blown innovation strategy.  Two changes at the level of conceptualizing the issue would help:

1) Take a broad view of innovation, not just technology development.

2) Look at the ways to strengthen the assets (tangible and intangible) needed to promote innovation, improved productivity and foster economic growth, including (but not limited to):

 Human capital

 Knowledge creation and utilization

 Organizational development

Interestingly enough, the questions raised in the Commerce Department get at some of these very issues.  More on this in future posts.

Crossposted from The Intangible Economy

 

 

 

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