Category Archives: Innovation

U.S. Innovation Falling Further Behind

Innovation creates so many jobs and so much opportunity for our country…it is absolutely key to our long-term success in the global economy, [and patent filings] are a reflection of innovation.”

—David Kappos, Director of the Patent Office

It would be hard to argue with Kappos statement—the U.S. has been a world leader in innovation for decades. Unfortunately, that reign may be coming to an end.

The number of patents filed in 2009 dropped 2.3 percent from the prior year…the first year since 1996 that fewer patents were filed by U.S. inventors year over year.

Yes, you say, but we are in the midst of the Great Recession, and we should expect patent filings to drop. True enough, but it does not explain why U.S. patents (yes, U.S. patents) issued to inventors in foreign nations increased 6.3 percent over the same period.

Here is what Bijal Vakil, partner on White & Case’s intellectual property team, in Palo Alto, CA had to say:

…this trend could spell financial ruin for some U.S. companies. We’ve lost our competitive edge, and other companies from other countries stand to benefit.

I’m about to go and watch the President’s State of the Union speech, where he is supposed to talk about jobs and getting our economy back on track. We’ll see!

But, here’s the real deal—Congress and the Administration can posture and postulate all they want, but if they don’t come up with a plan to get our kids and schools revitalized in the areas of math and science, innovation leadership will soon be taken over by other countries…and where does that leave our high-tech businesses then?

American Manufacturing…Bad News!

A recent joint report by Duke University and the Conference Board indicates that American manufacturing is continuing to fall further and further behind the rest of the world.

Here are some of the report’s highlights:

  • 53 percent of the companies surveyed had offshore manufacturing strategies in place—up from 22 percent in 2005.
  • 60 percent of companies with offshore strategies said they have aggressive plans to expand those strategies.
  • “Globalization of Innovation” (engineering, R&D, product design, and software development) is accelerating, thus reducing the need for U.S. innovation.
  • A domestic shortage of science and engineering talent is a key issue for off shoring projects. Off shoring compensates for domestic talent gaps.

So, the United States is falling further behind the rest of the world in both Innovation and manufacturing. It appears that lack of talent in America is a major cause. Why is that? If we do not have the talents to neither innovate nor manufacture, what is to become of the United States?

What needs to be done to create/develop the talent—and desire—necessary to again make the U.S. the mighty industrial nation it once was?

U.S. Falling Behind in Innovation–Part II

In Part I of this series (shown below this post), I presented the general findings of the
nonprofit, nonpartisan, public think tank, Information Technology and Innovation Foundation (ITIF), regarding Innovation in the U.S. vs. 40 other leading nations/regions of the world. The ITIF report is based on scientific findings–not opinions–and shows that not only has the U.S. dropped to the number 6 innovator in the world, but also its rate of change (improvement) is dead last.

In the same report, the ITIF also presents those things the U.S., or any nation/region, can do to improve competitiveness and innovation. I have capsulized their suggestions as follows:

  • Provide incentives for companies to innovate. Incentives should be in the form of robust R&D tax incentives; accelerated depreciation on new equipment; workforce development tax credits; corporate tax structures that make the U.S. more competitive world-wide; and other incentives that encourage businesses to spend more on innovation.
  • Encourage high-skilled immigration. The broader the scope of thinking–the better the likelihood of new ideas and innovation. The U.S. is currently sending high-skilled immigrants home, and that is counter productive in the long-term.
  • Promote a digital economy. The U.S. is successful in offering new digital devices and services, primarily to the younger generations, but they haven’t been able to make a mobile phone service that doesn’t consistently drop calls. There are thousands of square miles in the U.S. that have no mobile phone service, and thousands more that have only sporadic service. Also, there are more areas in the U.S. without broadband service, than there are with it. Europe and Scandinavia do not seem to have these problems. [A few years ago, I used a mobile phone near the Arctic Circle in Northern Sweden. Today, mobile phones are totally unreliable in my suburban house in the U.S.]
  • Support institutions that are critical to innovation. Not just universities that perform research, but also the kinds of institutions and training-centers that foster commercialization of their research. In addition, there should be more support for local economic development, entrepreneurship development, and workforce training.
  • Remove regulations and government policies that retard innovation. Small businesses produce 13 times more patents than large patenting firms, yet spend four and a half times as much per employee in compliance of environmental regulations, and 67 percent more per employee on tax compliance than big businesses do. In the U.S., not only does small business receive very little government support, but it also appears that the government is working against small business through overly stringent regulations of small business.

Well, there you are. That’s what the ITIF believes needs to happen to stop America’s slide into oblivion as a leading innovator in the new knowledge-based innovation economy of the world.

I believe all the above items are well and good–and should be done–but they seem to only address the symptoms. The above are things our government can heavily influence, but I believe the reason for America’s demise as the innovation leader goes much deeper.

Commentators to Part I suggested that the root problem is perhaps a cultural and socioeconomic problem. I believe they are right, and I will soon post, as Part III of this series, my views and concerns on the reasons for diminishing innovation in the U.S., along with what I think needs to be done to improve the situation.

I would also like to hear from everyone out there who has a suggestion on how they think we can bring innovation back to the forefront of the U.S.

U.S. Falling Behind in Innovation–Part I

It was bad enough that the U.S. traded its manufacturing might for quick profits by outsourcing outside the country, but now it looks like our knowledge-based economy is faltering under global competition as well.

A report just released by the nonprofit, nonpartisan, public think tank, Information Technology and Innovation Foundation (ITIF) indicates that innovation in the U.S. is rapidly falling behind the rest of the world. The study currently places the U.S. in sixth place in the world, and running at a pace that will place it even lower over the next decade.

There have been many studies made over time, as well as more recently, that place the U.S. as the world leader in innovation. However, those studies have been based on opinions, interviews, and surveys. This report by the ITIF is the first to approach innovation from a scientific perspective, using 16 indicators to study innovation and competitiveness. These indicators fall into six broad categories:

  • Human capital
  • Innovation capacity
  • Entrepreneurship
  • IT infrastructure
  • Economic policy
  • Economic performance

Not only did the ITIF study place the U.S. in sixth place in the world for innovation and competitiveness, but the study also determined that all of the other 39 nations/regions studied have made faster progress toward the new knowledge-based innovation economy in recent years than did the U.S. The study shows that the U.S. has made the least progress of the 40 nations/regions in improvement in international competitiveness and innovation over the last decade. The U.S. is dead last in this category.

This should come as no surprise, since the National Academies published their landmark study, “Rising Above the Gathering Storm,” back in 2005. It warned then that America’s lead in science and technology was “…eroding at a time when many other nations are gathering strength.” It appears their warning has come to pass.

What is happening to the greatest industrial nation in the world? Have we allowed greed and avarice to cloud our minds, so we can’t see beyond the next payday? Are IPO’s more important than innovation? Is shareholder value more important than spending profits and dividends on R&D and innovation? Are our industrial leaders so intent on filling their pockets, they have lost their way? Has our government (under the guise of public interest) regulated the heart out of those companies that could best put the U.S. back in the role of world leader?

The ITIF study presents six things that need to be done by the U.S. (or any nation/region) to improve their innovation and competitiveness. I will present these six things as part II in my next post. Watch for it.