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So, I was twittering something and thought to look through the tweets that had just been posted and found the niftiest thing –
What is Your Strategy for American Innovation? http://go.ostp.gov/eiZT32
And, of course copied it over on a document and then went over to it –
What is Your Strategy for American Innovation?
Posted by Aneesh Chopra on February 04, 2011 at 04:45 PM EST
In the spirit of commonwealth, I’m confident that we can exceed our individual potential when we come together to meet a larger challenge. Are you ready to win the future?
Aneesh Chopra is U.S. Chief Technology Officer
Which I read and then copied over to the document. And, then popped over to another tab with the pdf from about the Commerce Department from a link on that page while going to the nice slide/share page from the White House where the link for comments had taken me on the original tab.
Then I made a comment – which, as usual posted without one paragraph marked in it as seems to happen on every one of the government sites for some reason.
And, of course – in order to share my comment on the slide/share site, I had to sign up for it through Facebook and allow the two to do their sharing of informational content – and I just plain decided, what the hell – it hardly matters at this point, so I did that such that my comment could actually go to them. (more or less – my guess is that they all have other things to do besides reading my comments on the matter.)
But, here is what I wanted to share with them and posted there –
I appreciate the need to study what research is being done in light of what is being most productive or most effective, but I really think that is part of the problem. The way it is set up now, our government and state resources are going into studying studies on top of studies of studies of things that had already been studied in their measure in the first place. Not only, to get funding are the basis and benefits of the research provided but, also as the research continues to its peer reviews and eventually into the investment community and the marketplace. Throughout that process, there are multiple stages at which the usefulness of the research is having to be justified and then at every opportunity there are more Science Foundation, State, Federal and International funds being put into studying whether it was worth doing the studies and research in the first place. All of those funds could have been spent to do something else valuable including taking that research being done originally into a manufacturing context for our nation’s businesses to be built with it – or something.
It reminds me of the filters that were researched and engineered to put on smokestacks of various industries many years ago which would have cost about $200 each to place on the polluting facilities – but industries and businesses didn’t want to do it. So, to save money and not be told what they could or could not do, they insisted that the government put money into studying the problem and that the states and academic research groups study whether the initial studies and engineering were valid. And, then they studied it some more and paid a team of lawyers and many years of lobbyists and pr firms to keep from even the suggestion of installing those filters. And, then at the point at which it would have cost about $2500 each to install those filter systems, they did the same thing again and didn’t install them at that point either. But, a multitude of studies were made again and new studies made along with new lobbying and pr campaigns. Eventually, the filters were either placed on the smokestacks at a cost of (more or less) $25,000 a piece or the companies moved what they were doing to another country which is putting up with them polluting whatever population is in that country where they are now.
The amount of money, time and efforts spent on the example above far exceeds what could have been done with that situation in the first place if the original science and engineering had been accepted and several hundred filters had simply been placed on the smokestacks. And, beyond that least costly choice – further updates to the science and engineering could have built forward in better efficiency and better opportunities for our nation in the meantime with cleaner air, better health in our population and better quality of life.
This is a long-winded way of saying that some of the problems we have now with innovation and seeing those innovations to the marketplace, of creating startup businesses and having opportunities for all Americans to start a business, if they want to do that – are literally problems built into, not only the mindset, but the ways that things are being done currently and for the better part of the last thirty years in America.
In a way, it could be said, (to be fair), that doing things in the manner described in the example above does yield a number of businesses and opportunities that simply breed out of doing it that way, but the cost of it has been to have wasted years and dollars with no greater nor timely solutions to show for it. And, to do it that way has made us look foolish in the eyes of the world and to have wasted time, national resources and the efforts of many great minds, great engineers, a great deal of money, talents, knowledge, resources and great science on innovations and research being used that way. Part of the losses in opportunity costs is that our nation’s leaders and business decision-makers have been doing things this way without yielding a wider array of solutions to a great many things that really needed their attention and that continue to need our nation’s intellectual assets applied to them.
We are already a nation of studying the studies of the things we’ve already studied. To do any more of that is just a waste. Either the rational justification to fund the study was appropriate enough to have funded it in the first place or it wasn’t. Our efforts need to be re-focused to use those innovative discoveries that have resulted from the research our national assets have already paid to produce and get those into applications in the marketplace.
I would say what is required to start a business from where I sit in America and the absolutely impossible hindrances, obstacles and obscene legislated requirements and complexities that have been set in the way for nearly every American to start a business, but it is just about enough to fill an entire book. It is no wonder that people get disgusted with it – the playing field is not level, the competition within the US is not fair, the risks are massive and the returns are questionable at best.
And, then even if everything is done right and goes well, its only purpose is to provide a profitable exit strategy for any number of investors who want to pull their money out plus a 3-5 times return on it within two or three years of having funded it. What is the point in that?
Thanks for asking though.
My Note here –
They had these four questions on the Commerce Department document which I read before contributing my comment above and really only had an interest in the first two questions right now –
- Government research and development: How can the economic impacts of basic research funding (e.g., NSF, NIH) be better measured and evaluated? What methods can the Federal Government use to prioritize funding areas of basic research, both within an area of science and across areas of science? How can existing Federal government institutions (not just organizations, but also programs, policies, and laws) devoted to basic research and innovation be improved? Are there new institutions of these types that are needed to achieve national innovation goals? How could the government increase support for industry-led, pre-competitive R&D?
- Entrepreneurship: Through what measures can government policy better facilitate the creation and success of innovative new businesses? What obstacles limit entrepreneurship in America, and which of these obstacles can be reduced through public policy? What are the most important policy, legal, and regulatory steps that the federal government could take to expand access to capital for high-growth businesses?
- Intellectual Property: What are the key elements of any legal reform effort that would ensure that our intellectual property system provides timely, high-quality property rights and creates the best incentives for commercial innovation? How can the intellectual property system better serve the dual goals of creating incentives for knowledge creation while also ensuring that knowledge is widely diffused and adopted and moves to its best economic and societal uses?
- Education: How important is catalyzing greater interest and training in science, technology, engineering, and mathematics (STEM) fields? What strategies can be most effective on this score? Can educational technologies be better utilized to this end? What are the critical opportunities and limitations to the creation and adoption of effective education technologies? How can investments in community colleges better leverage public-partnerships to better train Americans for the jobs of today and tomorrow?
There has to be a better way to prioritize Federal and State research dollars than to study the studies again and again and again. It has made an entire industry of studying without ever doing anything with any of it at this point.
That is one thing. The other is that I’ve noticed in China, Japan, and a few other nations, they are investing in R&D with an eye to get results, returns and revenues from them in twenty years from now, or in fifty years from the time money was put into it, and in some cases, maybe even longer periods of time. By doing that, they have been able to reap returns and revenues from those things very quickly – say in two-five years. That is because they are putting a lot of money into it and into continuing the funding of it in an ongoing basis without expectations that it must show any immediate returns to be taken out of it as justification for it to continue.
The advantage of doing it that way and at one time in this country we had done it that way is in being able to cull the harvest from it quickly when those discoveries and breakthroughs are made. There is enough money underwriting it for the science to get done, for the engineering to get done, for the confirmation of results to be made, for safety considerations to be checked and for market applications to be designed as well as creating the manufacturing systems to mass produce whatever it is.
In the manner that the US has been doing it for the last thirty – fifty years, if a product cannot justify itself or if an avenue of research cannot justify itself within a very short period of time (usually less than two years) with a substantial return of profitable revenues, then it is dropped and not proceeded further. That is costing us.
Those patents and research avenues are being sold in fire sales by brokers and corporations just to get rid of them and the profits they would have made for the US and our national business community is lost.
Investors want a short term return. Companies want a short term guaranteed return. Corporations and banks want short term guaranteed returns. And, innovation by its very nature is not guaranteed by the successes of what has come before it. As an example, the track record of auto sales generally cannot begin to prove to a banker, investor or corporate entity that innovative electric cars or hybrid cars will be guaranteed sales. So, therefore – the tendency is to put all the resources in cookie cutter fashion into what has already been proven over that which has not.
There has also been a tendency toward very shady, inappropriate strategies in many industries and businesses to grab up those innovations that are available intending no use for them whatsoever to simply keep them out of the marketplace where others might use those things in competition with them. The invention of a battery system heavy duty enough for commercial vehicles, small trucks, light duty transportation uses and long-range passenger cars was available for a number of years and could have been incorporated into all manner of vehicles but the patent was tied up by one of the large automotive companies (Dodge, I think it was) so that it couldn’t be used in competition with them. There are a number of situations like that which have hindered, and halted innovations being applied in the marketplace. In America, that is considered the way to do good business. And, I suppose it is except for the long-term costs of doing it that way.
When the monopoly thinking takes over, it doesn’t seem to hurt anything in the immediate experience. There are profits. Others can’t compete effectively (at least using that one avenue.) And, everyone appears to be happy – shareholders are happy, Wall Street is happy, business magazines and colleges telling about it seem happy, the customers aren’t being hurt in any way and generally, everything seems good and okay about it. But, the reasons that we have had laws about it and particularly, against many of those business practices in our history is because those strategies do cause harm, not only in the long-run but to our national interests, as well. Our nation is reeling from the disadvantages of doing many, many things that way.
Now, rather than having a multitude of small businesses selling gasoline, for instance, with its variety of Mom and Pop shops, we have national and international companies, franchises and huge conglomerates with all of those resources and revenues. Well, it was a trade-off and we let those big companies monopolize the marketplace. We are living with the results of what we traded-off to get, for better or worse. We are suffering those disadvantages, one of which was watching the gas prices go up every fifteen or twenty minutes on the retail gas outlets when the prices speculators were pushing for barrels of crude oil went higher in the summer of 2008 and then when the barrel prices went down, the retail prices started to shuffle downwards sometimes weeks later by a few pennies at a time.
That is a disadvantage. And, companies, families, communities, distributors, small businesses, medium-sized businesses, food suppliers, retailers, truckers and even airlines (eventually) suffered for it. And, many of the other disadvantages and obstacles that have been created in our marketplace for Americans to start their own businesses, innovate, invent, create or grow their own businesses have been caused by some of the same kinds of choices made by businesses too big to fail, but too small not to lobby.
In fact, imagine what happens when I want to create a business. There is a need that I see for a person to be able to go into any store and buy something which would show up at another store in another state or another location across town. I know their computers are tied together and they are part of the same corporate entity. But, I also know that they are sometimes franchise stores, that their inventory systems are not necessarily the same in every state and that their financial systems do not integrate from store to store. I think this could be fixed with a bit of software which could be designed and then sold to the store’s corporate headquarters to do this job for them. It would serve their customers. It would serve my needs and my family’s needs when we want to buy groceries or formula for for a daughter or son or grandbaby or friend or someone somewhere in some other state. It would allow us to purchase a fan or heater or air conditioner here where we live that they could go to their local store and simply pick up to have it right now on the same day. We could buy tires for their car when the tires are so bald that they aren’t safe anymore and pay for them to be picked up near the college where they are living or in the state where they decided to runoff to in order to have some freedom from us.
It is true, that between what I know and what other people who can do programming know, that we could create the software to do this. That is a fact. It is a good innovation. That is also a fact. I can even write a business plan to show how it would make money and project revenues for it with something less than a lie and fairly close to the reality of what costs it would have and sales it could make. However, then what happens? The state where I live wants to have a number of registrations for who I am and what I am doing with it in a business sense. The local municipalities want a business license to be registered. To protect the concept, I have to not tell anybody but in some way protect it through the intellectual property registrations that are available. I have to give it a snappy name that is easy to remember and not over two syllables. I would need to be able to tell somebody about it in 30 seconds using what amounts to about two sentences of very easy to remember information that includes where they can get it. And, then I have to go over to the SBA, the banks, the angel investors, or some group of family members, none of which think I can get my socks on right, let alone do something with a business effectively. And, here I would sit with that nice software designed to do a specific, much needed, very commercial, innovative thing with its snappy name and 30 second spiel to tell someone about it. Then, with another $250,000 to run around the country and pitch it to every chain store – I would have some sales of it or licensing for it to those stores, maybe. If they didn’t simply tell me they weren’t interested and then get on the phone after I leave and have somebody over at the nearest college design it for them to use while I’m on my way home.
And, I didn’t even mention that my credit would have to be sterling, which it isn’t, my character would have to have proof of being sterling for the last fifty years out of fifty two, which it isn’t and everything else that would need to be done correctly would have to be done correctly before anyone would begin to want to put money into it to get it going. I mean, that trademarks for the name and copyrights purchased, any patents required would have to have at least provisional patents applied for and all the legal things of being a business generally. And, then – the investors, potential partners or anyone else getting into it would want guarantees that they would get substantial returns for using their money. Then in two years, they would want their money back plus the returns they were told to expect or more. And, at that point – either more money to keep it growing would have to be located or the whole thing would go bankrupt and end up sold for pennies on the dollar.
It wasn’t on that list of things above – but there is also money required to market, to tell people about it, to promote it, to have a website about it, to tell industry leaders about it, to go sell it, to go pitch it to companies and industries that might use it, to run around networking with others who might tell others about it, and to have a team of attorneys fight to keep my ownership of it, because whether another company or group actually has the same thing before I did or not, they can say they did and then it is my responsibility to prove them wrong in courts. Oh yeah – and I’d have to have collateral to put up such as property or a huge savings account or stocks or bonds or who knows what and I don’t have any of that. And, if I did have any of that I wouldn’t need to borrow money to put a business together in the first place.
Oh yeah – and one other thing, right off the top of my head – when the stores would use the software that I and a team designed that my business is selling and they do end up collecting information about their customers who are using it and then the store sells that information – it could very well be a liability against the software manufacturer rather than against the retailer’s behavior and choices which would also take a team of lawyers to fix. The fact that things like that could tie up resources and time and efforts and public goodwill in courts and fooferrah makes it a possibly risky choice even after doing everything right, if everything to satisfy the law is done and everything else required actually works.
And, don’t even get me started about the tax code . . .