Thursday, September 03, 2009

The government's role in innovation

Recently a number of bloggers and Tweeters have linked to an interview with Greg Bialecki, who works for the governor of Massachusetts on economic development. The question posed to Bialecki was "what is the appropriate role for state government in accelerating innovation?". Bialecki does a good job of straddling the many sides of the question, noting that many businesses are against more government involvement, since they believe it will lead to regulation and taxes, or favortism.

But the question is a good one. At any level of government, from a city to state or province to a federal or national government, what is the appropriate role for the government in an innovation policy or strategy? It seems to me to break down into three likely outcomes.

The first is based on the Apollo program. In this instance the government identifies a significant need or opportunity and challenges itself and industry to achieve it (put a man on the moon before the end of the decade). Note that the statement doesn't dictate specific technologies or vendors. It is a challenge that created excitement and enthusiasm. Government agencies, private industry and other organizations then asked themselves - OK, if we are going to achieve this seemingly difficult mission, what is necessary for us to do? Then they went on to solve a number of engineering challenges and captured the attention of the nation. Thousands of kids (I'm one) wanted to become an astronaut because of the excitement and glamor. I think that this kind of effort - creating a challenge that engages all of the population - is one involvement in innovation that governments should have continuously. Right now, rather than creating a 1000 page health care plan, the government should set a specific goal and ask all of us to help achieve that. Perhaps the goal is universal coverage with no increase in healthcare outlays. We need big challenges to come together and overcome these hurdles.

This leads to the second possible government involvement - selecting preferred industries or technologies. Government involvement in selecting the "best" or preferred industries or technologies is fraught with hazard. Left to its own devices, the government that created ARPANET might still be monopolizing the ability to communicate and interact. Clearly any government with research facilities should be responsible for generating new research, but not selecting which technologies are approved or disapproved. Government involvement at that level and scale is bound to be tied up with political favoritism and will be showered on the largest and most powerful (see for example the GM bailout, or the bailout of larger banks).

The third kind of involvement is something rarely seen in the US outside of the Defense Department - a public/private partnership. The government could easily define specific issues or challenges it faces and create opportunities for innovation to address these specific issues. While this does occur on a limited basis today, the contracting rules and the size and influence of incumbents make it difficult for smaller firms or new entrants to compete. This means that many of the same old tired ideas and concepts are constantly recycled. If the Federal government could open itself up to more innovation around its biggest challenges, and invite a wide array of innovators and reduce the issues around contracting, it could create an entirely new innovation community which might significantly impact its ability to govern and its ability to deliver services. Secondarily to these outcomes would be the scaling of new ideas which could then flow back into the private sector. Thus, the government could be an incubator of ideas that eventually benefit the private sector. To a certain extent, this was true in the 40s, 50s and 60s, but as significant government research has dwindled, less innovation flows out of the government. We could easily turn the tables by asking the citizens and industries to respond to innovation challenges.

From my perspective, I don't want to see any government picking industries or technologies. I do want the government to identify key challenges and needs, and bring together the best minds to create innovative solutions. Currently, one of the biggest stumbling blocks to innovating with, or for, any government is the bureaucratic hurdles involved in contracting, and the over-reliance on existing "beltway bandits" who have long incumbancy but little innovation incentive. Let's open up the interactions, bring more people and firms into the innovation arena and have governments define the big challenges and turn the rest of us to work.
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posted by Jeffrey Phillips at 7:05 AM


Blogger Peter Evans-Greenwood said...

The Australian government has done a nice job of positioning government's role in innovation, with the report Powering Ideas: An Innovation Agenda for the 21st Century. Essentially, it promotes a strategy of make making innovation as cheap as possible by ensuring that innovators have access to cheap and efficient infrastructure, but shies away from placing specific bests in individuals, companies, sectors or even research institutions.

8:14 PM  
Anonymous Dale B. Halling said...

Since 2000 we have passed a number of laws and regulations that are killing innovation in the US. The incredible innovation of the 90s was based on technology start-up companies built on intellectual capital, financial capital, and human capital. All three of the pillars have been under attack since 2000. Our patent laws have been weakened reducing the value of intellectual capital. Sarbanes Oxley has made it impossible to go public reducing financial capital for start-ups and the FASB rules on stock options have made it harder to attract human capital to start-ups. A good start would be to undue these innovation killing changes in U.S. law. For more information see

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