Paradigm Lost: New Policy Models for Innovation Mavens

On November 10th, 2010, the Program on America and the Global Economy hosted Dr. Jerald Hage to take part in a ‘Tuesday’ Innovation Policy Group discussion. Dr. Hage, a Professor at the University of Maryland and Director of the Center for Innovation presented “The Evolution of Science and Technology and the Need for New Policy Models.”  As the title of his talk suggested, Hage highlighted a new policy model for science and technology development and contrasted them the present model.  Dr. Hage’s presentation was based on his forthcoming book Restoring the Innovation Edge: Driving the Evolution of Science and Technology, which looks into how innovation processes can be better managed, especially among policy makers.  Kent Hughes, director of the Program on America and the Global Economy, introduced Dr. Hage and moderated the event.

Dr. Hage began by noting that the rapid increase in the amount of expenditures on RDT and the increasing number of countries involved in research means that there is now global competition over innovation.  To compete effectively we need a new policy model.

Two different policy models for science, technology, and innovation were presented. The first being the present policy model, which focuses on input-output and market regulation and draws upon neo-classical economics.  The second model focuses on the management of innovation or the throughput at the sector level and is evolutionary rather than static with network governance.  Dr. Hage argued that the U.S. faced a crisis in innovation.  Signs of this included lost employment and the growing negative trade balance in advanced technology products. Dr. Hage argued that eight obstacles have to be overcome to restore the innovation edge including more public-private partnerships and less stove-piping of information between labs.  He stressed that “innovation is concerned with the solving of problems and thus very different from a concern about productivity or the conservation of resources.”

Dr. Hage then presented his six research arenas for innovation, which are;

  • Basic Research,
  • Applied Research,
  • Product Development,
  • Manufacturing Research and the third industrial divide,
  • Product Quality Research especially for eliminating risks to the environment and,
  • Commercialization Research

When he turned to how innovation must be reformed in order to fit these new evolving arenas, he specified the need for a better network of governance within and between companies.  Going back to his theme of globalized innovation he gave the example of the much delayed Boeing 787 Dreamliner, which should have been in commercial use over two years ago but has been stalled by development setbacks, which Dr. Hage attributed to the failed effort to establish good networks between the suppliers of the different parts.

Focusing on manufacturing research, Dr. Hage then discussed the divide between U.S. companies and their competitors, specifically as it relates to manufacturing and quality research.  In order to maintain a competitive edge, Dr. Hage argued that the United States needs to keep its focus on all six of the arenas of innovation.

While addressing some of the shortfalls of U.S. innovation, Dr. Hage provided four policy recommendations for specific sectors to reverse failed models.  The first recommendation focused on sectors of high tech and large companies such as transportation, pharmaceutical, and defense suppliers.  In order to advance innovation at this first level, Dr. Hage called for research consortiums to help in cooperation and information sharing.  The second industry group was small high tech companies such as developers of alternative sources of energy and a number of advanced technologies.  For this group, Hage urged an increase in private-public partnerships to increase innovations in manufacturing and quality.  Within the food and services sector, that is low tech and large companies, Hage provided several examples of successful models and called for increased cooperation, similar to the first group, to build consortiums amongst the players.  The final group consists of the construction and agricultural sectors and others with low tech and small companies.  Here Hage saw the need for to adopt the successful agricultural extension model and apply it to these manufacturing sectors.

Drafted by: Michael Darden

Kent Hughes, PAGE Director

Photo credit: David Hawxhurst, Wilson Center

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