Don’t let U.S. science and technology go off the “cliff” — ACS

Reverse Innovation: Create Far From Home, Win Everywhere

Which way does innovation flow? Traditionally, products and services have been thought of as originating in advanced economies, which have a more suitable environment for technological development than do developing countries. Authors Vijay Govindarajan and Chris Trimble would argue that the reverse is also true.

Deputy managing editor of the Wall Street Journal Alan Murray reviewed Govindarajan and Trimble’s new book Reverse Innovation, which provides a different model of successful product innovation. Rather than taking products designed for developed countries’ demands, businesses have increasingly been doing the reverse – creating “innovative new products for developing countries” and adapting them “to satisfy demands in the developed world.” Murray provides several of the authors’ examples of “reverse innovation” in his article, including General Electric’s inexpensive compact ultrasound medical scanners that were originally developed for the Chinese market, but became successful just about everywhere.

However, “reverse innovation” is held back by the low profit margins of the developing world. To combat this obstacle, Govindarajan and Trimble promote “local growth teams,” which Murray describes as “small, cross-functional, entrepreneurial groups located in emerging markets” that can both effectively utilize advanced technologies and cater to local markets.

Indeed, finding a way to mitigate these barriers to innovation could greatly help developed countries address significant problems such as rising health care costs. Reverse Innocation authors use the example of Narayana Hrudayalaya hospital in India, which had benefited from “process innovation” – the key to lowering the cost of open-heart surgery to around $2000, about a tenth of what it costs in the U.S.

 

Posted by: Pokyee Yu

Sources: The Wall Street Journal, Reverse Innovation

Photo Credit: Reverse Innovation. By Vijay Govindarajan and Chris Trimble. 229 pages. Harvard Business Review Press. $30

The Importance of Intellectual Property in the U.S.

Most experts and policymakers are aware of the critical role innovation plays in the U.S. economy.  It underpins our competitive advantages and is the source of continued economic growth and prosperity.  As America seeks to regain its competitive edge in the wake of the Great Recession, innovation remains a major point of discussion in policy circles.  A key factor that has enabled America’s strong innovation environment is intellectual property and its standards.  A solid intellectual property (IP) regime, and the rights it guarantees, provides innovation incentives and protections, creating a climate the rewards risk-taking, creative thinking, and ceaseless advancement.  It’s safe to say that intellectual property is important to the U.S. economy, but just how important?

The U.S. Department of Commerce just released a joint report from the Economics and Statistics Administration and the U.S. Patent and Trademark Office that goes a long way in answering that question.  The report cites that IP has both direct and indirect benefits for almost every industry, and these benefits flow upstream and downstream in the production chains.  IP is used “everywhere in the economy” and the rights granted to holders of IP “support innovation and creativity in virtually every industry.”  While all industries rely on some form of IP, the report identifies 75 industries as “IP-intensive,” approximately one quarter of all domestic industries.  They account for almost 20% of all U.S. employment and tend to pay average weekly wages at a 42% premium.  In addition, every two IP-intensive jobs support another one indirectly, thereby raising attributable employment to almost 30% of total employment. These industries account for over $5 trillion in value-added to U.S. GDP and contribute to over 60% of total goods exports and roughly 20% of all services exports.

The data above clearly support the vital importance of intellectual property to American innovation and the economy at large.  This understanding makes it critical that the United States continue to protect intellectual property at home, and especially abroad.  It is a primary source of U.S. exports and the root of its competitive advantage in trade.  The continued protection of American ideas and intellectual capital promotes “innovative, open, and competitive markets, and helps to ensure that the U.S. private sector remains America’s innovation engine.”

Posted by Brian Gowen

Sources: The U.S. Department of Commerce

Photo credit USPTO@Alexandria courtesy of flickr user cytech

Robots in the Military

The U.S. military has become increasingly dependent on robots in the last 10 years, stemming from operations in Iraq and Afghanistan. In fact, in 2004, the U.S. Army only had 162 robots; now it boasts 7,000. The robots are used for a variety of purposes including, “scout for booby traps and roadside bombs” and “lift heavy objects. There are robots that can be “tossed through a window to check out a room” before soldiers enter the premises. Unmanned vehicles such as drones have become regular features of battle.

However, with the wars in Iraq and Afghanistan winding down, there is some concern that funding for robotics programs linked to military endeavors will be eliminated. On the other hand, leaner military budgets might actually increase the acquisition of robots since there is a “heightened emphasis to do more with less,” says a senior equity analyst at BB&T Capital Markets. In the grand scheme of the things the United States would prefer to have fewer boots on the ground in any military operation, therefore safeguarding the lives of American soldiers.

Major robotics companies like iRobot Corp. and QinetiQ are often supported by regular Defense Department budgets, so their programs shouldn’t be affected by the winding down of wartime operations abroad. Military robotics are taking the place of older specialized (read: special-ops) equipment like night-vision goggles which are now widely available to troops. The unmanned aspect of military procedures is an attractive outcome of the increased research and development spending in advanced technology sectors. Additional outcomes include decreased wartime spending and decreased casualties because of the ability of robots to multiply the military force of an operation without increasing troop numbers.

Posted by: Devon Thorsell

Source: The Wall Street Journal

Photo credit Talon robot courtesy of flickr user QinetiQ group

TOMORROW- You are Invited and Live Webcast-The Start-up Act: Building America’s Entrepreneurial Future

The Program on America and the Global Economy Presents:

 The Start-up Act: Building America’s Entrepreneurial Future

 Tuesday, April 24, 2012

Joseph and Claire Flom Auditorium, 6^th Floor, Woodrow Wilson Center

________________________________________________________________________        

 8:30 a.m.

Registration and Continental Breakfast

 9:00-9:45 a.m.

Keynote Address:

Senator Jerry Moran, Kansas

Senator Mark Warner, Virginia

 9:45 a.m.-12:00 p.m.

 Panel Discussion:

Paula Collins, Vice President, Government Relations, Texas Instruments Incorporated

Toby Smith, Vice President for Policy, Association of American Universities

Audrey Singer, Senior Fellow, The Brookings Institution

 Moderated by: Kent Hughes, Director, Program on America and the Global Economy

 ________________________________________________________________________

Senators Warner and Moran will discuss key components of their Start-up Act, which they authored and introduced.  A panel discussion will follow with an examination of the prospects of accelerating the commercialization of university research, increasing opportunities for immigrants with advanced STEM (science, technology, engineering, and Mathematics) degrees and adding a STEM category for immigrant investors seeking permanent residence.

 ________________________________________________________________________

Please RSVP acceptances only to page@wilsoncenter.org

Watch the live webcast here.

Directions to the Wilson Center: www.wilsoncenter.org/directions

The End of an Era

In case you missed it Tuesday morning, the space shuttle Discovery streaked through the skies above downtown Washington, D.C. on its farewell tour before it will come to rest at Smithsonian’s Steven F. Udvar-Hazy Center in Virginia.  Thousands gathered along the National Mall and on rooftops scattered throughout the city to catch a glimpse of the shuttle as it piggy-backed on a Boeing 747 up from Cape Canaveral.  People cheered as the shuttle soared overhead, and for many, especially those who have grown up in the midst of the awe and wonder of the American space program, the flight symbolically marks the end of an era.  In 2011, NASA decided to end the low-orbit shuttle program in favor of focusing on farther destinations, and Discovery was the first of the three retired shuttles to head to a museum.

Many people decried the decision as a sign that America’s science and technology dominance was waning and that the nation’s innovative capacity was not what it used to be.  Others felt that if it didn’t already, the termination of the program would lead to innovative decline as the research was cut and motivation was gone.  It remains to be seen whether there will be negative effects from the termination of the low-orbit program, such as fewer knowledge spillovers from research or a lack of students and young people interested in science and space because the possibility of space travel is remote.

However, a few private entrepreneurs and their companies are waiting in the wings to pick up the slack and capitalize on NASA’s withdrawal from the “space market.”  Companies like Space Exploration Technologies Corp, also known as SpaceX, and will begin carrying cargo to the International Space Station, and the first commercial cargo flight is expected within weeks.  Commercial passenger craft are unlikely to be ready for another 3 to 5 years.  Nonetheless, low-earth orbit could become a whole new market for luxury travel and leisure, just the way commercial airline flights were in its early days.  Despite the fact the end of the NASA shuttle tugs at the heartstrings of many Americans, this is certainly not the end of space flight for the United States.  Fittingly, America’s spirited entrepreneurs seem ready to fill the gaps and continue to push innovation forward into the future.

Posted by Brian Gowen

Sources: The Wall Street Journal

Photo credit The space shuttle Discovery flies over Washington, D.C. courtesy of flickr user Official US Navy Imagery

You are Invited–The Start-up Act: Building America’s Entrepreneurial Future

The Program on America and the Global Economy Presents:

 The Start-up Act: Building America’s

Entrepreneurial Future

 Tuesday, April 24, 2012

Joseph and Claire Flom Auditorium, 6^th Floor, Woodrow Wilson Center

________________________________________________________________________        

 8:30 a.m.

Registration and Continental Breakfast

 9:00-9:45 a.m.

Keynote Address:

Senator Jerry Moran, Kansas

Senator Mark Warner, Virginia

  9:45 a.m.-12:00 p.m.

 Panel Discussion:

Paula Collins, Vice President, Government Relations, Texas Instruments Incorporated

Toby Smith, Vice President for Policy, Association of American Universities

Audrey Singer, Senior Fellow, The Brookings Institution (invited)

 Moderated by: Kent Hughes, Director, Program on America and the Global Economy

 ________________________________________________________________________

Senators Warner and Moran will discuss key components of their Start-up Act, which they authored and introduced.  A panel discussion will follow with an examination of the prospects of accelerating the commercialization of university research, increasing opportunities for immigrants with advanced STEM (science, technology, engineering, and Mathematics) degrees and adding a STEM category for immigrant investors seeking permanent residence.

________________________________________________________________________

Please RSVP acceptances only to page@wilsoncenter.org

For more information on this event click here.

Directions to the Wilson Center: www.wilsoncenter.org/directions

Production’s Role in Innovation

Since the State of the Union, “winning the future” has emerged as a hallmark of the Obama administration’s strategy for economic recovery, in an attempt to “out innovate, out educate, out build the rest of the world.”  With a nod to the innovative “spark” of the American people as the key to regaining lost manufacturing output, the President’s plan focuses on revamping science and math education and doubling exports in the next five years.

The United States has increased its exports 20% so far in 2011, but a simultaneous increase in imports has expanded the trade deficit close to 4% of GDP.  Susan Houseman, a senior economist at the W.E. Upjohn Institute, noted that the fraction of American goods made with foreign parts has risen from 17% to over 25%  since 1997—if counted, meaning more than a 1% drop in the reported American output.

A weaker manufacturing sector has implications for the entire American economy, and several business leaders point to production as another important tool for revival.  Mark Pinto, Executive Vice President of Applied Materials, suggested that investments in scale and technology beyond R&D innovations can attract business and keep American producers at the head of the market.  He argues that, by keeping production more local, the economy can retain the skilled workers that make the products, who Houseman and others believe play an integral role in the process of innovation.  “The big debate today is whether we can continue to be competitive in R&D when we are not making the stuff that we innovate,” Houseman said. “I think not.”

These theories do not discount the importance of a strong education system, but instead provide a supplementary theory of how United States manufacturers can stay competitive in the near term.  John Seely Brown, a former head of Xerox’s Silicon Valley research center recently told the Financial Times that “We really have to get back to building things.  We can’t just design things.”  Advocating spending on research and digital and physical infrastructure, Brown sees a “new kind of 21st-century economy that still has us building stuff.”

Posted by: John Coit

Sources: The New York Times, Financial Times, Wall Street Journal, Foreign Policy, Whitehouse.gov

Photo Credit: Industrial Construction – Automotive Industry courtesy of flickr user grayconstruction

Budgeting Innovation

Today marks the release of President Obama’s proposed budget for Fiscal Year 2012.  Every year the budget announcement  is marked by jockeying and spin on both sides of the aisle.  While the annual unveiling of the budget serves to spark ample discussion as to what an administration is prioritizing, it is worth exploring what the budget has to say about innovation.

Within this year’s budget is a section titled, ‘Competing and Winning in the World Economy.’  The proposals in this section, focused on innovation and American competitiveness, include preparing 100,000 STEM teachers, increasing investment in R&D, updating infrastructure, and doubling American exports.  However, a number of the President’s proposals appear to face an uphill battle in Congress, including investments in energy innovation.

Given the current fiscal constraints the federal government is in, the President’s budget also takes into account the costs of these investments.  In order to increase revenue the budget proposes to reduce the deficit by $10 billion through spectrum reallocation.  Critics, meanwhile, claim that this figure might not be accurate as the estimates vary as to the  revenue to be generated.

Posted by: Clark Taylor

Sources: marketplace, the hill, whitehouse.gov

Photo Credit: P071310PS-0302 courtesy of The White House’s photostream

National Science Foundation Study Finds Varying Degree of Innovation

The National Science Foundation has released a preliminary report entitled “2008 Business R&D and Innovation Survey (BRDIS),” measuring the level of innovation across different industries  in the United States from 2006-2008.  The report received data from 1.5 million for-profit public and private companies. The study found that nine percent of the companies were active product innovators, but the data showed significant differences between industries.

Within the manufacturing industry, 22 percent responded that they had introduced innovations composed of “one or more new or significantly improved goods or services,” compared to only eight percent outside the manufacturing industry.  The computer/electronics subsector produced the highest marks, with some companies reporting 45 percent product innovation.  The non-manufacturing sector also showed a very wide range.  For example, software publishers produced a high rate of innovation, 77 percent, and health care services produced only ten percent.

However, the report did show one strong positive correlation between research and development (R&D) and innovation.  Around three percent of the respondents invested in,  and funded R&D and reported high levels of innovation.  Companies investing $50-$100 million per year reported an increase of 76 percent in new or upgraded products while those spending over $100 million per year reported a high of 81 percent.  In a striking comparison, the remaining 97 percent of companies that failed to invest in R&D showed poor innovation performance.  The report was the first of its kind and shows a large disparity within industries, but has the potential to provide a framework for innovation industry by industry.

Posted by: Michael Darden

Sources: National Science Foundation

Photo credit: Dome of the Reichstag building by night courtesy of flick user alles-schlumpf