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Slightly Better iPhones Won’t Fix the U.S. Economy

January 30, 2017, 9:36 PM UTC
iPhone 10th anniversary
iPhone 10th anniversary. File photo dated 18/09/07 of the Apple iPhone, the device that redefined the mobile phone and has helped make Apple the most valuable company in the world, which marks its tenth anniversary on Monday. Issue date: Sunday January 8, 2017. It was on January 9 2007 that late Apple founder and chief executive Steve Jobs went on stage at the companyÕs Macworld event to announce the tech giant was to reveal Òan iPod, a phone and an internet communicatorÓ - but rather than three separate products being revealed, one of the first truly smart phones was unveiled. See PA story TECHNOLOGY iPhone. Photo credit should read: Cathal McNaughton/PA Wire URN:29648094
Photograph by Cathal McNaughton—PA Wire/PA Images/AP

Last month, The Wall Street Journal‘s Greg Ip published a provocative article explaining the hidden problem with today’s economy: “We’re out of big ideas.”

As Ip put it, “Houses, appliances and cars look much like they did a generation ago. Airplanes fly no faster than in the 1960s. None of the 20 most-prescribed drugs in the U.S. came to market in the past decade.”

He’s right. While there are more scientists and engineers than ever, historically high levels of R&D spending, and major advances in artificial intelligence and driverless cars, people’s living standards still feel largely stagnant. Technological progress is largely failing to provide the kinds of change and opportunity people expect in terms of employment, security, environmental sustainability, and health.

If we want to break past lackluster economic growth rates and make meaningful change in lives and livelihoods, we need to move beyond incremental innovation (think slightly-better iPhones) toward revolutionary innovation (think new energy systems, next-generation electronics, and cures for Cancer and Alzheimer’s).

There’s a way federal policymakers can help. If the new administration really wants to restore U.S. manufacturing, fix the trade deficit, and boost innovation, it should leverage the best ideas that come from federal research programs and invest in funding the next big thing.

In the mid-20th century, the U.S. championed innovation globally, creating and commercializing quintessentially big ideas like semiconductors, lithium-ion batteries, photovoltaic cells, and the Internet. Companies like Bell Labs led the way by making ambitious, long-term investments in these kinds of groundbreaking technologies. Such firms excelled by integrating the “innovation pipeline” from early conceptual laboratory work all the way to workforce training and manufacturing readiness. In short, they turned emerging ideas into practical solutions that could create jobs and improve lives.

Times have changed. In comparison to the Bell era, today’s big industrial firms are much more focused on incremental innovation to boost near-term earnings. While government science and tech funding is focused on basic research, corporate R&D mostly aims to bring new, slightly-improved products (like the upgraded iPhone or marginally-better cholesterol drug) to market. While the economy keeps chugging along, there’s a dearth of truly long-term investments to translate the basic research into world-changing technologies and products. The Obama administration’s Manufacturing Innovation Institutes—which focus on developing manufacturing technologies through public-private partnerships—are an important first step toward filling this innovation gap. But there’s far more work to do in order to ensure products can be created and commercialized.

Here’s a potential next step: The federal government could establish a National Innovation Foundation (NIF) to replicate Bell Labs’ winning model and catalyze public-private investment in transformative technologies.

Today, there are more than a dozen federal agencies—from the National Science Foundation (NSF) to the National Institutes of Health (NIH)—all focused on funding science and technology research to advance American interests. But these research agencies are all striving to get to different finish lines rather than working to leverage each other’s unique strengths and resources to achieve breakthrough innovations that benefit everyone.

If we’re going to create products that improve livelihoods and create new American jobs, we need a new model of funding innovation: a marathon relay in which agencies and other partners tag-team efforts toward a common finish line—for example, new advanced building materials, nanotechnologies, energy storage systems, or regenerative medicines. The idea isn’t just to pursue “big ideas” through innovation and invention in fields like these, but ultimately to see research investments all the way through to manufacturing and commercialization.

In the spirit of Bell Labs, a new National Innovation Foundation could connect federal agencies and outside partners to take on big innovation challenges jointly. Different players could contribute to the different pieces of the innovation pipeline, from basic research to early procurement to workforce development to regulatory policy to trade assistance.


This wouldn’t be a budget buster. A National Innovation Foundation could be formed by either consolidating relevant offices at key research agencies or creating a lean entity dedicated to identifying opportunities and investing strategically to transform the best ideas across the federal agencies to products that can be made here in the U.S. It would be tasked with identifying the most promising research being undertaken across the whole federal government and assembling public-private partnerships that aim to create new products and services that bring jobs and wealth to the United States.

The concept is pretty simple: Connect the dots across the federal research landscape to maximize taxpayers’ return on investment from R&D expenditures. Change the paradigm from R&D spending to R&D investment.

Fifty nations now have national innovation foundations or similar agencies devoted to translating discoveries and inventions into useful and commercially viable products and processes. If the new administration is serious about its promises to restore manufacturing and fix the nation’s trade deficits, it should naturally focus on helping to develop new technologies and products that we can build and export.

To boost job creation and economic growth, we need to boost big ideas.

Sridhar Kota is a former advisor to Barack Obama on advanced manufacturing and former assistant director of the White House Office of Science and Technology Policy. Justin Talbot-Zorn is a Truman National Security fellow and former legislative director for three members of Congress.