America’s National Innovation System Needs an Upgrade

April 30, 2021

It has been 75 years since Vannevar Bush wrote in Science: the Endless Frontier that “without scientific progress, no amount of achievement in other directions can insure our health, prosperity, and security as a nation in the modern world.” This call-to-arms jump-started a golden age for the United States as the world’s undisputed technological and economic superpower.

This week, as a new generation wonders aloud whether American technological prowess can continue to set the pace for the rest of the world, President Biden stood before the US Congress in his first speech to a joint session and promised “the biggest increase in non-defense research and development [spending] on record.”

If you’re part of the STEM economy – whether you work in government, academia, or industry – the president’s declaration should be a cause for celebration. But it should also be a wake-up call.

Our country’s innovation system is outdated and slow, and federal research funding and ambitious efforts like an ARPA at NIH alone will not fix it. Built on foundations nearly a century old, the processes and procedures at the core of America’s R&D National Innovation System are fraying badly. Despite having the world’s brightest scientists, technologists, and entrepreneurs, America’s innovation infrastructure suffers from structural problems in at least four areas: ecosystem visibility; external collaboration; internal coordination; and transaction costs.

Each of these deserve its own blog post in the future, but let’s start the conversation today.

Lack of ecosystem visibility

I’m consistently amazed by how many large companies only bother to collaborate with a handful of “top institutions” – even on mission-critical innovation programs like industrial automation and machine learning. The same is true in reverse: most large university Tech Transfer offices (let alone the smaller players) are in the habit of just calling “the usual suspect” corporations when trying to license a new technology. They’re missing a wealth of cutting-edge science, and industrial activity, that happens everywhere else. Yet in aggregate, this “long tail” of innovation activity represents the vast majority of tomorrow’s potential new success stories.

The root cause is simply a lack of leveraging data and analytics. Unless your organization is using Wellspring’s Scout platform, the information about “who’s doing what” is scattered in a variety of systems and sources – in which no single source can tell you everything you need to know. Even though long-tail insights can yield dramatic value for innovators, no one has enough time to independently scour everything from free sources like the USPTO’s online database to highly proprietary information (e.g., lists of early-stage startups in East Asia) that are captured in thousands upon thousands of data silos.

Lackluster external collaboration

The so-called “Valley of Death” remains a potent force standing in the way of American innovation, despite years (arguably decades) of laments from both the corporate and academic worlds. Although progress has been made in using various funding and startup vehicles to incubate promising discoveries until they have been de-risked (via SBIR and STTR programs, for instance), a large gap in desired outcomes versus actual results has persisted.

Mismatches in structural incentives prevent companies from being more willing to experiment with exploratory innovation programs; the same is true in reverse for granting agencies and research institutions. There is work to be done in building the right ecosystem mechanisms, and incentives, to promote robust, self-interested collaboration throughout the innovation lifecycle, from bench discovery to societal impact. For many research program managers, they have either no real KPIs (a problem common among Fortune 500 companies) or they are incentivized based on rate of success, which drives investments towards safe bets with “known partners”.

Poor internal coordination

Many of the research organizations I meet, including well-established R&D departments at some of the world’s largest corporations, have only a limited understanding of the innovation efforts already underway within their own company. One consumer products company we worked with revealed that they filed a patent on a “breakthrough” innovation, but the patent was rejected because it had already been granted to another division of the same company. Two research programs working in parallel to build the same technology.

Teams in different geographic units may discover, months or years later, that they were duplicating efforts inadvertently. Or that they are wasting time by unwittingly repeating efficacy studies already conducted by another team. Or that they are simultaneously working with the same external partners in parallel, unbeknownst to one another. By failing to provide transparency and connect the dots across the organization, they are missing countless everyday opportunities to foster force-multiplying innovations for the organization. In the long run, everyone loses – both individually and collectively.

High transaction costs

Transaction hurdles pose a real threat to innovation success – a scourge for every part of the Knowledge Supply Chain, from major research institutions to high-growth startups to multinational corporations. Identifying qualified partners, the long process of negotiating codevelopment or license agreements, and other practices slow down the gains from collaborative innovation. Plus, every time a technology licensing agreement is executed, there’s another round of delays and costs. Over and over, the lawyers get involved, literal paper is pushed, the middlemen take a cut of the investment, procurement enters a multi-month negotiation, and everyone waits around until they have the OK to start working together again.

Unfortunately, in too many cases, when it’s hard to get the deal done, the desired collaboration never materializes. Breakthrough opportunities sit on the shelf collecting dust – life-saving medical devices; powerful digital technologies; next-gen materials engineering; and much more. The IP is trapped in a place where it cannot be productive. The result is a huge and cascading set of inefficiencies which are inexcusable if the US hopes to out-compete countries like China in the race to discovery and commercialization.

The real work begins now

Without fundamental upgrades in both the human and digital infrastructure for innovation, America’s research community will fail to achieve the promise set forth in the Biden administration’s ambitious goals. I’ve had a front-row seat to these types of collective failures for years now. And I’m convinced these issues will continue to hold us back – unless we get serious about changing the status quo.

Systemic reform is hard because it involves contributions up and down the line – from all parties with a material stake in the outcome. While it’s true that much of the reforms will flow from the government – reducing red tape, setting economic policy, clarifying the national innovation mission – it’s also unrealistic (and frankly, unconscionable) for major players in the research and corporate worlds to sit back and wait for the ideal time to pitch in. Now is the time for us all to work together. We must remove the structural impediments to collective innovation success.

Therefore, to all our fellow innovators out there, here’s my advice: savor this moment. But also, let’s get to work.



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