Is US Innovation Flaming Out?
The result is that the country lacks a trove of big-deal technologies at a crucial time. "We have come off a major cycle, and we do not have the wherewithal to kick into the next cycle," said Judy Estrin, former Cisco Systems Inc. (Nasdaq: CSCO) CTO and Packet Design Inc. founder.
She was one of the speakers at a panel discussion titled, "The Innovation Economy: R&D and a Crisis," put on by the Churchill Club and hosted by the Silicon Valley offices of Microsoft Corp. (Nasdaq: MSFT).
Granted, the panel was entirely in favor of long-term basic research, the kind where scientists explore new areas without any promise of practical results. Think Bell Labs when it was, you know, part of the Bell System.
Estrin's new book, Closing the Innovation Gap, discusses the decline of U.S. innovation since World War II. Joining her on the panel were two executives from corporate research divisions and a venture capitalist focused on the research-heavy biotechnology industry.
One of Estrin's themes was that while an economy driven by self-interest is OK, the country has let that focus get too myopic. The culture of the last couple of decades, driven by Wall Street and Washington, has turned self-interest into a game of "short-term greed" rather than long-term goals, she said.
Along those lines, Estrin and other panelists agreed the United States has lost its appetite for any research that doesn't pay off quickly. "As a country and a business community, we have lost the courage to take risks," she said.
Some of that might be attributable to recent experience, as panel moderator Michael Mandel -- BusinessWeek's chief economist and a PhD in economics -- suggested. A lot of the money poured into new medicines didn't pan out, and some large investments in the dotcom '90s turned to dust. "It wasn't that people stopped taking risks; they had their risks beaten out of them," Mandel suggested.
In the interest of adding a contrarian note, Josephine Cheng, an IBM fellow and vice president of the Almaden Research Center, noted the information age is more than 30 years old -- arguing that perhaps a slowdown would be natural about now. Other panelists rejected that idea, though.
Cheng did agree that the United States doesn't seem poised for a burst of innovation to aid the economy. "We have too many MBAs and lawyers," she said. "We need to go back to focusing on basic science and technology."
One simple answer might be to point to biotech and say "Look! Gobs of innovation!" But partner Sue Siegel of Mohr Davidow Ventures expressed frustration at the difficulties in getting inventions out to the market.
"They've been on the benchtop, but what has not happened is the benefit to us, the consumers and patients," Siegel said. In part, that's because funding focuses on caring for sicknesses rather than preventing them; Siegel also noted the FDA needs more funding to be more capable of looking at the number of new technologies coming around.
Panelists doubted that the Obama administration's economic stimulus package -- crafted with a stated goal of job creation -- would be much of a help for long-term research.
"I worry that this is a very short-term stimulus package," said Rick Rashid, Microsoft's senior vice president of research. "You can do a lot of damage throwing a lot of money and not following up. You can spend a lot on infrastructure, and that's great -- but if it's just to create a couple of post-docs and they won't have a job in a few years, that's not."
Estrin noted that large nonprofits -- "the ones with endowments that can survive the stock market crash" -- have been good at funding long-term projects and could continue to do so.
— Craig Matsumoto, West Coast Editor, Light Reading