Recently, the President's Council of Advisors on Science and Technology (PCAST) met at the National Academy of Sciences to discuss and approve our most recent draft report on research and innovation, entitled, University-Private Sector Research Partnerships in the Innovation Ecosystem. Quoting from the executive summary (note that the final wording may change slightly), the goal of the study was to
… examine approaches to stimulate interactions between the private sector and universities, including new R&D business models that are scalable to a national level. As part of its study, PCAST also considered policies to incentivize interactions and to address potential barriers, such as intellectual property, tax policies, and organizational challenges. The study is aimed at improving the effectiveness of public and private sector research through cooperative investments, expanding interactions among personnel, and increasing opportunities for technology transfer in its broadest sense.
Perhaps coincidently, but more likely because the meme is both pervasive and compelling, this coupling of ecosystem and competitiveness mirrors that in the earlier study (Leadership Under Challenge: Information Technology R&D in a Competitive World) of the U.S. Networking, Information Technology Research and Development (NITRD) program, which I had the privilege to co-chair.
Although the findings and recommendations of the study are manifold, I took two major ideas away from the presentations and the report. The first is based on a funny but pointed remark from Norm Augustine. The second relates to prizes and their ability to inspire our imaginations.
Norm Said the Stock Dived …
I've always enjoyed the fact that the Office of Science and Technology Policy (OSTP) staff members rearrange our seating at each PCAST meeting. It gives me a chance to have sidebar conversations with different people during each meeting. At our most recent meeting, I happened to be sitting next to Norm Augustine, the former head of Lockheed-Martin.
Norm is a fascinating guy, with wonderful stories and a piercing belief in the importance of research as the critical enabler of the long-term, global competitiveness of the United States. You may remember that Norm led the group which produced the seminal report, Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Future, which in turn led to the America COMPETES Act. (Despite bipartisan support, the COMPETES Act, which would double federal funding for physical science research, remains unfunded.) But I digress from my story …
During the comment period after the public presentation of the draft PCAST report on the innovation ecosystem, Norm told a wonderful but sad story that could be a parable for our economic times. (Any inaccuracies or errors in the story are mine.) During his time as Lockheed-Martin CEO, Norm said they had identified a set of promising applied research directions that could yield long-term competitive advantage to company, after the requisite time and investment. Pleased and excited by this possibility, he dispatched one of his senior people (a group president, as I remember) to brief the Wall Street financial analysts.
Norm went on to say that the analysts nearly ran from the room at the end of the briefing to sell their Lockheed-Martin stock, which then dropped precipitously on the markets. He noted ruefully that it was nearly two years before the stock recovered to its price before the briefing. Chagrined by this experience, Norm said he asked the analysts at the next briefing why the company had been so punished for its planned R&D investment and for seeking to assure its long-term competitive position. The answer came back clearly and pointedly. Most investors held the stock less than eighteen months, and corporate investment beyond this horizon was viewed as a drain on the corporate coffers.
A Parable for Our Time
Norm told his story to highlight the dangers of short-term thinking and the risk to our competitive future, a point he also made recently in a Science editorial (Vol. 321, No. 5896, p. 1605
September 19, 2008), from which I cannot help but quote an excerpt:
Much has been accomplished since The Gathering Storm was published. A new research university was established, with an opening endowment equal to what the Massachusetts Institute of Technology amassed after 142 years. Next year, over 200,000 students will study abroad, mostly pursing science or engineering degrees, often under government scholarships. Government investment in R&D is set to increase by 25%. An initiative is under way to create a global nanotechnology hub. An additional $10 billion dollars is being devoted to K-12 education, with emphasis on math and science. And a $3 billion dollar add-on to the nation's research budget is in process. Of course, these actions are taking place in Saudi Arabia, China, the United Kingdom, India, Brazil, and Russia, respectively. What about in the United States?
The laurel in the race to the future sometimes goes to the sprinter, but more often the reward goes to those who have the vision, foresight and persistence to run the long and sometimes enervating marathon that is education, intellectual innovation and technology commercialization.
Perhaps more pointedly, Norm was quite literally telling his story as the U.S. government was desperately seeking to develop a rescue plan during the largest financial crisis since the Great Depression. Call it coincidence if you like; I view it as a warning.
Prizes: Powering the Imagination
During the PCAST meetings we heard from a variety of academic, government, industry and non-profit groups. One of the clear messages concerned the power of prizes to catalyze competition and innovation, with the sub-orbital space flight X Prize being the most visible and recent example. PCAST member Fred Kavli's foundation has also offered prizes for scientific innovation.
The incentive for such prizes is rarely the direct financial reward to the winner, but rather the collateral opportunities that accrue to the winner. For example, Paul Allen undoubtedly spent far more on Burt Rutan's Spaceship One than the $10M X Prize, but the international publicity was enormous, and Richard Branson's Virgin Galactic has booked revenue-paying passengers for future flights.
Even more important than the economic incentives is the power of prizes to focus the imagination and intellectual talent of a community on accomplishing something both difficult and audacious. In that spirit, in 2006 the U.S. Congress directed the National Science Foundation (NSF) to establish a prize program. Also, the National Academy of Sciences recently released a report outlining a series of detailed recommendations for how to conduct a prize program.