Addressing the Innovation Imperative The Role of Public Private Partnerships Pragmatic Approaches to Technology Transfer and Commercialization Belo Horizonte, Brazil November 18, 2009 Charles W. Wessner, PhD. Director, Technology, Innovation, and Entrepreneurship The National Academies 1 Charles W. Wessner PhD.
The National Academies National Academy of Sciences Chartered by Congress in 1863 A self-perpetuating Honorary Society National Research Council (1916) The Operating Arm of the National Academies National Academy of Engineering (1964) Institute of Medicine (1970) Today s Presentation reflects my personal views 2 Charles W. Wessner PhD.
Current Global Mega-Challenges Fostering Economic Growth Driving domestic Growth and Employment through Innovation Developing New Sources of Energy Commercializing renewable alternatives to oil Increasing the capacity to fuel growing global demand for electricity Addressing Global Warming Growing a Green Economy; A major Growth opportunity Delivering Global Health Transforming large investments in research to affordable and personalized treatment and care Improving Security Through all of the above 3 Charles W. Wessner PhD.
How do we Address these Challenges? Innovation 4 Charles W. Wessner PhD
The Innovation Imperative 4 Key Points Innovation is Widely Recognized as Key to Growing and Maintaining a Country s Competitive Position in the Global Economy Collaboration is Essential for Innovation as Small Businesses and Universities Play a Growing Role in the Innovation Process Institutional Change is Necessary to Compete Successfully New Incentives are Required for Change 5 Charles W. Wessner Ph.D.
How are Leading Nations Responding to the Innovation Imperative? They are providing four things: High-level Focus Sustained Support for R&D: Leveraging Public and Private Funds Support for Innovative SMEs New Innovation Partnerships to build clusters that bring new products and services to market S&T Parks; Laboratories; Universities 6 Charles W. Wessner Ph.D.
China s Drive for Innovation Government with strong sense of national purpose Strong investments in education and training Strategy to move rapidly up value chain Effective requirements for training and tech transfer Critical mass in R&D is beginning to be deployed to generate autonomous sources of innovation & growth Government goal is to acquire technological capabilities both to grow and to maintain national autonomy. Focused, Committed, and Willing to Spend Modified from C. Dahlman, Georgetown University 7 Charles W. Wessner PhD.
China s Share of Global R&D Rises 1999 6% 2007 15.5% 8 Charles W. Wessner PhD.
Europe s Best Innovators are Changing Finland, Sweden, the Netherlands, & France are among those Making Substantial public R&D investments Internationalizing the innovation environment Reforming university structures and public research institutes Mobilizing private capital for start-ups and growth companies ( eg. by providing tax incentives) Introducing new partnership programs for greater productivity in the services sector (private & public) Many of these Strategies draw from successful U.S. Policies and Programs, often with TIE/NAS Advice 9 Charles W. Wessner PhD.
Brazil s Innovation Imperative New Investments and Institutions Underscore New Focus on Science, Technology and Innovation 10 Charles W. Wessner PhD
Brazil s Innovation Strategy Strengthen the National Innovation System Reinforce National S&T institutions Invest in a skilled workforce Support S&T infrastructure Promote innovation in enterprises Financial and Technical support for innovative firms Provide incentives to start-ups Increase R&D in strategic areas Bio, Nano, Health, Biofuels, Space, and Nuclear Use S&T and Innovation for social development 11 Charles W. Wessner PhD.
Brazil s Growing R&D Investment Source: Glauco Arbix, University of São Paulo, 2009 12 Charles W. Wessner PhD.
Brazil s New Institutions Source: Glauco Arbix, University of São Paulo, 2009 13 Charles W. Wessner PhD.
Brazil s Key Challenges Strengthen Policy Framework Improve coordination and management of policies of new institutions dedicated to innovation Create new innovative companies Innovation is mostly identified with high technology. Foster cooperation between Universities and Enterprises Help promising SME s access credit and financing Educate more high quality scientists and engineers Source: Glauco Arbix, University of São Paulo, 2009 14 Charles W. Wessner PhD.
Innovation in the United States The Importance of Positive Framework Conditions The Key Role of Public-Private Partnerships Charles W. Wessner, PhD
Current U.S. Advantages in Innovation Key Advantage: A society open to innovation Trust in Science & Scientific Institutions An economic and institutional infrastructure that quickly re-deploys resources to their most efficient use Strong & diverse higher educational system Deep and flexible capital and labor markets Strong S&T institutions Entrepreneurial Culture A large and integrated domestic market Ability to grow new Large Firms 16 Charles W. Wessner Ph.D.
Major Challenges Facing the U.S. Improvement needed in Education System K-12 Challenges in Science and Math Fewer students pursuing Science Careers Insufficient Support for Commercialization Few programs Effective, but limited scope Market Oversell & Ideological Blockages limit the Commercialization of R&D Uneven & Insufficient R&D Funding New opportunities in Health, e.g., nano applications need to be fully exploited But Physical Sciences and Engineering should not be neglected 17 Charles W. Wessner Ph.D.
Concerns about Downward Trend in Major Areas of Federal Research Support 18
A Renewed Focus on Innovation Science and innovation is "more essential for our prosperity, our security, our health, and our environment than it has ever been." President Obama at the National Academies April 27, 2009 19 Charles W. Wessner, PhD
Obama Pledges to Raise R&D and Create new Incentives for Innovation We will devote more than 3 percent of our GDP to research and development. The U.S. joins the quest for the Lisbon Target We will not just meet, but we will exceed the level achieved at the height of the space race, through policies that invest in basic and applied research, create new incentives for private innovation, promote breakthroughs in energy and medicine, and improve education in math and science. Address to the National Academy of Sciences, April 27, 2009 20 Charles W. Wessner, PhD
A Challenge for the U.S.: Turning growing R&D Investments into Competitive Products for the Market A Role of Public-Private Partnerships
What are Partnerships? Partnerships refer to cooperative relationships involving: Government Industry Laboratories Universities Definitions are not tight Tend to be ad hoc arrangements to achieve common goals Some debate definitions; other create partnerships 22 Charles W. Wessner, PhD
Partnerships for Innovation Innovation Partnerships Play a key role in Encouraging Collaboration needed to Develop and Market New Ideas Proven Partnership Mechanisms Include: Innovation Awards Industry-University Cooperation Cooperation S&T Parks Research Consortia Why are Partnerships Needed? 23 Charles W. Wessner, PhD
The U.S. Myth of Perfect Markets Strong U.S. Myth: If it is a good idea, the market will fund it. Reality: Potential Investors have less than perfect knowledge, especially about innovative new ideas Asymmetric Information leads to suboptimal investments George Akerlof, Michael Spence and Joseph Stiglitz received the Nobel Prize in 2001, "for their analyses of markets with asymmetric information 24 Charles W. Wessner PhD
Reality: The Early-Stage Funding Valley of Death Federally Funded Research Creates New Ideas Capital to Transform Ideas into Innovations No Capital Dead Ideas Innovation & Product Development 25 Charles W. Wessner PhD
The Role of Innovation Awards Imperfections in capital markets can sometimes pose major challenges to small firms trying to bring their innovations to market Innovation awards provide entrepreneurs with early-stage funding, helping them cross the innovation Valley of Death The U.S. Small Business Innovation Research (SBIR) Program is a key example of an successful innovation award program 26
What is SBIR? It is a gated innovation system, providing awards to small companies to Provide Proof of Principle Develop Prototypes Successful Companies Attract Private Capital and/or win Public Contracts The Program converts Knowledge into Products to meet Social Needs 27 Charles W. Wessner PhD
$148 billion The SBIR Open Innovation Model R&D Investment $100K Social and Government Needs PHASE I Feasibility Research $750K PHASE II Research towards Prototype Private Sector Investment Non-SBIR Government Investment PHASE III Product Development for Gov t or Commercial Market Federal Investment Tax Revenue 28 Charles W. Wessner, PhD
Academies Research Reveals SBIR Impact on Firm Formation and Growth Company Creation: 20% of responding companies said they were founded as a result of a prospective SBIR award (25% at Defense) Research Initiation: SBIR awards played a key role in the decision to pursue a research project (70% claimed as cause) Company Growth: Significant part of firm growth resulted from award Partnering: SBIR funding is often used to bring in Academic Consultants & to partner with other firms 29 Charles W. Wessner, PhD
The SBIR program has become a key force in the innovation economy of the United States SBIR Founded SBIR now accounts for nearly a quarter of all U.S. R&D 100 winners, an annual list of top 100 innovations Source: Block and Keller, Where do innovations come from? ITIF July, 2008 30 Charles W. Wessner, PhD
Universities play a Growing Role in Commercializing Innovation Universities that are able to connect with Industry Drive Regional Development and are Assets for National Competition 31 Charles W. Wessner, PhD
Industry-University Cooperation From the Ivory Tower to the Marketplace Research Related to Industry Helps Generate Training and Skills Necessary for Productive Lives (and the tax dollars for Research) Industry s Needs and Questions can Drive Research and be a Source of Relevant Publications 32 Charles W. Wessner, PhD
Roles of the 21 st Century University Teach the next generation With up to date laboratories on real market questions About the sciences needed to address current and future questions (e.g., nuclear waste, stem cell research, genetically modified food) Conduct Research Curiosity-driven Research, certainly but the University also needs to bring Science to bear on Social Problems and Industry Needs Commercialize New Science-led solutions to societal problems New Products, Processes Generate Market-ready students Create a cadre of creative and curious team players 33 Charles W. Wessner PhD
The Role of Research Parks Research Parks stimulate and manage the flow of knowledge among universities, R&D institutions, firms and markets They facilitate the creation and growth of innovation-based companies through spin-off and incubation They provide value-added services together with high quality space and facilities They help create a Innovation Clusters that transfer new ideas from universities and laboratories into the marketplace 34 Charles W. Wessner Ph.D.
S&T Parks can be a Catalyst for Innovation Well-conceived and regularly assessed S&T Parks can Advance university missions Small Companies Universities Large Companies Help create companies Build partnerships among researchers, small companies, and large companies University Researchers S&T Park Public Support Increase public support and help justify increases for university funding Research Institutions 35 Charles W. Wessner, PhD
The Role of R&D Consortia R&D Consortia coordinate Pre-Competitive Research among Firms in an Industry to Develop New Technologies The Sematech Consortium was successful in helping to restore the health of the U.S. Semiconductor Industry in the 1990 s Semiconductor Industry Roadmaps credited with sustaining Moore s Law Pervasive use of faster and cheaper IT has permanently raised U.S. productivity levels Dale Jorgenson New Consortia can Provide a Proven Path Forward for New Technologies and New Opportunities Flexible Displays and Battery Technologies 36 Charles W. Wessner Ph.D.
Creating Successful Partnerships for Innovation
Partnerships Help Address the Innovation Imperative Properly constructed, operated, and evaluated, partnerships can provide an effective means of accelerating the progress of technology from the laboratory to the market. They can play an instrumental role in accelerating the development of new technologies from idea to market. Finding of the National Academies 11 Volume Study of Government-Industry Partnerships Chaired by Gordon Moore 38 Charles W. Wessner Ph.D.
Framework Conditions for Successful Partnerships National policies shape the larger environment in which innovation takes place These relate to Fiscal and Monetary Policy Education and Training Flexible Labor Policies Trade Promotion and Expansion Regulatory Policy Intellectual Property Protection Government Procurement 39 Charles W. Wessner Ph.D.
Operational Conditions for Successful Partnerships Although partnerships vary in scale, mission, and scope, successful partnerships appear to share some similar broad characteristics: Industry based Leadership Clear Goals, Metrics & Roadmaps Shared Commitments & Costs Regular Internal & External Assessment 40 Charles W. Wessner Ph.D.
Partnership mechanisms work best when they work together Innovation Awards, S&T Parks, Research Consortia and 21st Century Universities complement and reinforce each other to create robust innovation ecosystems 41 Charles W. Wessner PhD
To Conclude Well Designed Partnerships can Accelerate Innovation needed to address Global Challenges 42 Charles W. Wessner PhD
Innovation is the Key to how Nations Compete and Grow in the 21st Century Innovation is key to growth, prosperity, and security Resource Inputs are Essential, but are not Sufficient Incentives are Required for Innovation and this involves Institutional Change Innovation Partnerships help structure the incentives for successful collaboration 43 Charles W. Wessner Ph.D.
Innovation Policy is no longer a Hobby It should be recognized as a central function of the government Innovation is key to a nation s wellbeing and competitiveness The dynamic development of the economy is in the interest of the current and succeeding generations It requires sustained attention & regular review Sustained, high level policy involvement Requires an understanding of the innovation ecosystem Need to monitor how well the country is doing Learning from others is a must: Advisory Boards 44 Charles W. Wessner, PhD
Our Common Challenge The Challenge for Brazil and the United States is to Adjust to the new Globalization Dynamic and to help shape it This involves initiating change through competitive incentives: Incentives for entrepreneurial activity for Small Firms, Large Firms, and Universities Incentives (not mandates) for cooperation among all actors Mutual Learning and Cooperation are Essential for our Common Future 45 Charles W. Wessner Ph.D.
Thank You Charles W. Wessner, Ph.D. Director, Program on Technology, Innovation and Entrepreneurship The U.S. National Academies 500 Fifth Street NW Washington, D.C. 20001 cwessner@nas.edu Tel: 202 334 3801 http://www.nationalacademies.org/step 46 Charles W. Wessner Ph.D.