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November 1, 2011

Innovation and the American Dream

The Comeback: How Innovation Will Restore The American Dream

by Gary Shapiro. Beaufort Books, 2011

As president and CEO of the Consumer Electronics Association, Gary Shapiro oversees one of the world's largest conventions devoted to innovation. He sees all the cool new stuff first, and he knows a lot of people who have come up with genuinely revolutionary inventions. Mark Cuban, founder of MicroSolutions and Audionet (now Broadcast.com), and owner of the Dallas Mavericks, wrote the book's forward, calling it a plea to remember the American dream on which the country was founded.

And it is a plea, very personal and heartfelt. But unfortunately, not very good. Shapiro's family, his toddler, his travels, his personal decision to forego a law career in favor of work for associations is very interesting to him but not to the rest of us. If this were an up-by-the-bootstraps story or as well written as Make It in America (Forward, May/June 2011), it would be a different story. The view from within the consumer electronics industry should be a fascinating perspective on innovation. Alas, no.

Advantage: How American Innovation Can Overcome the Asian Challenge

by Adam Segal. W. W. Norton & Company, 2011

This book is everything The Comeback is not: thoughtful, well written, insightful and based on analysis of the changing global economy by a big thinker. Adam Segal is a counter-terrorism fellow at the Council on Foreign Relations and a contributor to the Financial Times and the Wall Street Journal. Given that one of the most frequent laments about America's loss of ground in the innovation race is its threat to national security, Segal makes for an interesting commentator on the subject.

He, for one, is not so sure that we are losing the race, or even that we're in one. “Even if we insist on seeing this as a contest,” he writes, “it is far too early to assume that the Chinese are going to eat our lunch.” Sure, you can count things like the number of patents or graduates in the sciences, but that is what Segal calls the “hardware” of innovation. The “software” is more complicated, “the abstract web of institutions, relationships and understandings that move ideas from lab to market.” In that abstract web, no other country is better positioned than America.

We are also better at correctly positioning innovation in the realm of “low politics.” Low politics, in Segal's definition, includes trade and economic relations, whereas high politics encompasses foreign policy. Innovation in Asia is still largely driven by political goals, whereas in the United States we see it as an engine of the economy, making lives better and creating things with practical applications and price tags.

The problem is that we have become too focused on practicality and marketability. We are not taking advantage of innovation's “software” in the way we used to when we clearly led the world. We have become too timid and too reluctant to spend money unless there is a marketable product at the end of the research. We are resting on our laurels and complacency will defeat us before the Chinese do.

Globalization, the very factor that set up the supposed race and that threatens our national security according to some, is a fact. A “blinkered perspective does us no good,” Segal says. “Distance is dead. Everything that can move, will.”

After a page-turning analysis of all of the issues, including the argument between scientists who say there is no threat to national security and defense analysts who say there is, what Segal calls “a dialogue of the deaf,” he reaches a conclusion full of recommendations that would keep us where we need to be in terms of innovation.

  • “The software of innovation must be open and collaborative.” Scientists and innovators must be able to work across platforms and encouraged to collaborate.
  • “The software of innovation must be secure and stable.” “The creation of new knowledge is far more important to the security of the country than the defense of any technological lead, real or imagined, it currently possesses,” he writes.
  • “Risk remains essential.” In order to innovate you have to be willing to fail, or else the ideas are too small, the consequences too conservative. Aiming low gets us nowhere.
  • “There are no grand strategies, just local fixes.” “We need chaotic experimentation,” writes Segal, “. an upsurge in small start-up companies . decentralization of responsibility and initiative.”
  • “Americans must all feel they have a stake in 'user-driven' innovation.” Policymakers must stop promising trickle-down effects and the eventual benefit to the general populace and do a better job of connecting the dots. They could “expand trade adjustment assistance and wage insurance, fund greater investment in on-the-job training and worker retraining, fix the system of health insurance and make it portable.” All of these things would make it much easier to start a company.
  • “The United States must be tightly linked to science and technology hotspots in the rest of the world.” We spend more on research and development than the next seven largest spenders combined. But we cannot become complacent about our clout or our relationships with scientists and institutions around the world. As emerging economies raise their standards of living and education, inevitably more innovation will happen abroad. Competition is dead; collaboration is all.