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Response to competitiveness RFI – the innovation process

In the final installment of this series of comments on the questions posed by the Commerce Department’s Competitiveness study RFI (see here, here, here, here, and here), we have saved the best — or at least the most interesting and far reaching — for last.  Topic #8 is the Implications of changes in the innovative process.  The RFI asks the following questions:

In recent years, some experts have noted that the innovation process itself is changing, and that approaches such as user-driven innovation, open innovation, design thinking, combinatorial innovation, modularity, and multi-disciplinary innovation are growing in importance. What are the policy implications of these and other changes in the innovation process? Should policy makers be thinking differently about our approach to industrial organization and competition policy in light of these changes?

 The answer to the last question is a resounding yes.  Yes, policy makers should be thinking differently about approached to not only industrial organization and competition policy — but to every other part of innovation and competitiveness policy as well.

As currently framed, the question focuses on anti-trust/competition policy.  But the shift in the nature of the innovation process has profound implications for all of innovation policy.  Our current policy is still an artifact of the industrial era linear model of innovation.  Under that model basic research leads to applied research leads to technology development leads to product development lead to product demonstration which finally leads to commercialization.  The key elements of that policy are resources in at the front end (funding, STEM educated personnel), technology transfer activities in the middle and IP protection at the end.

Innovation is not this neat progress.  Even when it follows this path, there are numerous feedbacks loops and cases of starting over.  But in many case, innovation is more like a stew – with various elements — technology, business models, financing, organizational structure, marketing concepts — being combined to create the end product.  An entrepreneur pulls together a previously uncoordinated hodgepodge of ideas and technologies into a product or service that customers demand.   Pieces of technology are combined in new ways (such as combining lasers and compression algorithms to create the compact disk).  In some cases, the technology is secondary to and a means of facilitating the business model — for example ZipCar or even iPods.  

In fact, technology may not even play a role.  As Professor Christopher Hill has noted: “In the post-scientific society, the creation of wealth and jobs based on innovation and new ideas will tend to draw less on the natural sciences and engineering and more on the organizational and social sciences, on the arts, on new business processes, and on meeting consumer needs based on niche production of specialized products and services in which interesting design and appeal to individual tastes matter more than low cost or radical new technologies.” (“The Post-Scientific Society,” Issues in Science and Technology, Fall 2007)

Innovation policy needs to catch up to the innovation process.  For example, a demand driven model innovation shows that government procurement and regulations can drive innovation.  Government as a demanding customer can create the “thin opening wedge” — new products and services that have a specialized use. Once that specialized use is established, the product or service can be refined and adopted to a broader customer base. The demanding customer in fact becomes a co-creator.  Regulations can serve the same function by creating demanding customers.

To take another example, we have Engineering Research Centers in a number of areas.  Why don’t we have one for design thinking?  Or why aren’t we also funding research on and demonstration of new business methods and organizational mechanisms as part of the “Catalyze Breakthroughs for National Priorities” element of the innovation strategy?  Why aren’t we funding more organizationally-focused challenges, such as the DARPA “Red Balloon” challenge?

These are but two of numerous examples of how thinking toward innovation policy needs to be expanded.  Throughout the comments I have made on the RFI, this theme of thinking in a more broad context has repeated itself over and over again.  This last topic highlights that concern.  Thus, the basic question underlying the entire RFI is a modification of the one stated above: In light of the changes in the innovation process, how should policy makers be thinking differently about our approach to innovation policy?

This question is worth of study and intense discussion in and of itself.  Posing the question in this RFI is a good starting point.  But only a starting point.  I would urge the Department of Commerce to undertake that specific dialogue, discussion and examination.


Crossposted from The Intangible Economy

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