This was based on substantial investment in basic research and an environment which encouraged innovation. However, the last 10 years or so, many things have changed. In 2008, the Organization of Economic Cooperation and Development (OECD) ranked the US 22nd in the percentage of GDP devoted to non-defense research. At the same time, China has a 15-year plan tying 60% of the country’s economic growth to scientific and technological innovation.
In parallel, the business environment has changed substantially in the US. Venture capital has started becoming more short-term focused, having an adversarial relationship with the entrepreneurs. The core values of patience, risk-taking and trust are becoming scarce.
In parallel, the business environment has changed substantially in the US. Venture capital has started becoming more short-term focused, having an adversarial relationship with the entrepreneurs. The core values of patience, risk-taking and trust are becoming scarce.
Openness, another core value for innovation, has been damaged by the short-sightness of investors, as well as the Bayh-Dole Act which gives universities ownership of intellectual property resulting from federally funded research. On top of this, the inflow of innovative talent from other countries has slowed down by the Patriot Act.
At a critical time, when innovation is needed to fuel economic growth, innovation in the US is facing serious challenges.
American and European companies continue to lead in the development and marketing of innovative new products, but Asian firms challenge this dominance. As a recent article of the Economist points out (The Economist, Dec 30 2008), Apple’s iPhone represents a good example of how new products are being put together presently and how most of the new products may be developed in the future:
American and European companies continue to lead in the development and marketing of innovative new products, but Asian firms challenge this dominance. As a recent article of the Economist points out (The Economist, Dec 30 2008), Apple’s iPhone represents a good example of how new products are being put together presently and how most of the new products may be developed in the future:
Apple is an American company, but the components of the iPhone are almost entirely Asian: the screen is mostly from Japan, the flash memory from South Korea, and it is assembled in China.
Apple’s contribution is the design and software—and, importantly, integration of the innovations of others. A lot of the research and product innovations are increasingly happening in Asia.
A good set of recommendations on how the US could re-gain its competitiveness is outlined in Judy Estrin’s new book “Closing the innovation gap”.
A good set of recommendations on how the US could re-gain its competitiveness is outlined in Judy Estrin’s new book “Closing the innovation gap”.
