Innovate America:
Thriving in a World of
Challenge and Change
Turning Words into Deeds: An Action Plan for
STEM Education
Bill Bates
Council on Competitiveness
November 8, 2005
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.
The innovation ecosystem concept shifts the
debate
Most Policy Makers See Discrete Issues With Narrow
Constituencies
Federal R&D
Spending
S&E
Workforce
Regional
Economic
Development
Workforce
Training
Intellectual
Property
Entrepreneurship
Healthcare
Manufacturin
g
INNOVATION
POLICY
Accounting
Rules
Higher
Education
Technology
Transfer
K-12
Education
We See a Single
Innovation Policy with a
Broad Constituency
Offshoring
BusinessUniversity
Collaborations
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.
Innovation is more than just new technology
What Is Innovation?
 “the intersection of
invention and insight”
 Improves on the existing
way of doing things
 Generates value for
society
 Can be a product, process,
service, strategy, etc.
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.
The Challenges of Innovation
21st Century Innovation
 Faster
 Collaborative
 Multidisciplinary
 Demand-driven
 Global
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.
Competition -- Investment
U.S. Multinationals Have Rapidly Increased The
Amount of R&D They Perform in China
$600
600
$500
500
$400
400
$300
300
$200
200
$100
100
$0
Number of Affiliates
R&D Spending
($ millions)
R&D Spending and Number of Affiliates of U.S. Parent Companies in China,
1994-2000
0
1994
1995
1996
1997
R&D Expenditures
1998
1999
2000
Number of Affiliates
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.
It’s Not Just Wages . . .
U.S. Multinational Corporations Do Most of
Their Offshore R&D in Developed Countries
R&D Performed b y Foreign Affiliates of U.S. Parent
Companies, Millions of Dollars, 2003
United Kingdom
Germany
Canada
France
Japan
Sw eden
Israel
Italy
China
Sw itzerland
Singapore
Belgium
A ustralia
South A merica
Brazil
Spain
Malaysia
Hong Kong
Korea
A ll Others
0
500
1,000
1,500 2,000
2,500 3,000
3,500 4,000
Millions of Dollars
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.
Concerns about U.S. competitiveness and
INNOVATION
U.S. Is Losing Its
Dominance in the Sciences
China Is a New Hotbed of Research
New York Times 09/13/04
New York Times 05/03/04
Is America Losing Its
Edge? Innovation in a
Globalized World
Competitive Edge of U.S. Is
at Stake in the R&D Arena
Wall Street Journal 05/17/04
Foreign Affairs Nov/Dec 2004
America Retreats from Leadership in
Innovation
United States
Has Crisis in
Innovation
Atlanta Journal Constitution 08/06/05
Miami Herald 08/11/05
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.
Science and Engineering Degrees
A Smaller Percentage of Americans Earn Degees in
Science and Engineering Than In Other Countries
Ratio of First University S&E Degrees to 24-year-old Population, 1975 and 2000, or
most recent year
14
12
10
8
6
4
2
Sw It
itz a ly
er
l
G and
er
m
a
Ca ny
Ne n
th ada
er
la
nd
s
Ja
pa
n
Sp
ai
Ire n
la
Un
Sw n d
ite
d ed e
K
n
So ingd
ut
om
h
Ko
re
Ta a
iw
a
Fr n
an
Fi ce
nl
an
d
Ch
i
M na
ex
i
Be c o
lg
iu
m
Un No
ite rw
a
d
St y
at
es
0
1975
2000
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.
Basic Research
Funding For Life Sciences Continues to Rise
While the Physical Sciences Stay Flat
Federal obligations for total research by field, millions of constant 1996
dollars
30,000
25,000
Life Sciences
20,000
Physical Sciences
15,000
Math and Computer
Sciences
10,000
Engineering
5,000
0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.
Martin Marietta concluded that it had an
unusually rich set of opportunities that could
be reaped by increased investment in applied
research. . . .The price of our stock
plummeted the next day and continued to
decline gradually for another eighteen months
as we persisted in our strategy.
-Norm Augustine, fmr. CEO, Lockheed Martin
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.
Foreign Students
Student Visa Applications Declined Post-9/11
Student Visa Applications, Issued and Denied, 2001-2003
450,000
400,000
350,000
300,000
250,000
Refused
200,000
Issued
150,000
100,000
50,000
0
2001
2002
2003
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.
The Council on Competitiveness has been
addressing these issues for 20 years
 Founded in 1986
 Non-profit, non-partisan
 More than 170 members: CEO’s,
university presidents and labor
leaders
 Mission is to set a public policy
action agenda to:
 Drive U.S. productivity growth
 Bolster high living standards
“Our agenda is at
the nexus of
necessity and
opportunity—and
we all have an
obligation to serve
the nation.”
–Duane Ackerman, CEO,
BellSouth Corporation,
Chairman, Council on
Competitiveness
 Ensure success in global markets
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.
The National Innovation Leadership Council
O'Donnell Foundation
Devoted to Excellence in Education
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.
The NII Presidents Council
Business-Higher Education Forum
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.
The NII Presidents Council cont’d…
CASC
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.
Innovate America -- Issued December 2004
• Build the Base of Scientists and Engineers
TALENT
• Catalyze the Next Generation of American Innovators
• Empower Workers to Succeed in the Global Economy
• Revitalize Frontier and Multidisciplinary Research
INVESTMENT
• Energize the Entrepreneurial Economy
• Reinforce Risk-Taking and Long-Term Investment
• Create a 21st Century Intellectual Property Regime
INFRASTRUCTURE
• Strengthen America’s Manufacturing Capacity
• Build 21st Century Innovation Infrastructures
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.
NII Talent Agenda
Build the base of
scientists and
engineers
Catalyze the next
generation of
innovators
Empower workers
to succeed in the
global economy
• National S&E
scholarship fund
• Portable graduate
fellowships
• Traineeship grants
• Funding for
Professional Science
Masters programs
• Expedited
immigration process
for foreign S&E
students
• Problem-based
learning in K-12 and
community colleges
• Opportunities for
students to bridge
the gap between
research and
application
• Innovation curricula
for entrepreneurs
and small business
managers
• Lifelong Learning
Accounts
• Portable health and
retirement benefits
• Improved worker
transition and training
assistance
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.
18
NII Investment Agenda
Revitalize frontier
and
multidisciplinary
research
Energize the
entrepreneurial
economy
• Innovation
Acceleration grants
• Long-term research
at Department of
Defense
• More support for
R&D in physical
sciences and
engineering
• Permanent,
restructured R&E
tax credit
• Innovation Hot
Spots to capitalize on
regional assets
• Coordination of
federal economic
development
programs
• Tax incentives for
angel networks
Reinforce risktaking and longterm investment
• Compensation
structures to reward
long-term value
creation
• Protection for
disclosure of
intangible assets
• Reduce the cost of tort
litigation
• Financial Markets
Intermediary
Committee to evaluate
new regulations
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.
19
NII Infrastructure Agenda
Create national
innovation growth
strategies
• Federal innovation
strategy
• National and
regional alliances
• New innovation
metrics
Create a 21st century
intellectual property
regime
• Better quality
patents
• Patent databases as
innovation tools
• Best practices for
collaborative
standards setting
Strengthen America’s
manufacturing capacity
• Centers for production
excellence
• Standards for interoperability
• Innovation Extension
Centers
• Industry-led roadmaps
for R&D priorities
Build 21st Century Innovation
Infrastructures– the healthcare test
bed
• Electronic health reporting
• Standards for integrated health
data systems
• International electronic exchanges
• Performance-based purchasing
agreements
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.
Innovation Requires Private Sector
Leadership
I.B.M. Unveils Plan to Train Employees to
Be Teachers
-NYT, September 17, 2005
I.B.M. announced a new program that would pay to train
some of its veteran employees for second careers as
teachers.
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.
Turning Words into Deeds
• Change the discussion so that innovation
becomes an economic policy.
• Develop a consensus.
• Move beyond reports . . .
– Legislation.
– 2007 Budget.
– State of the Union.
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.
The President’s Agenda to Maintain Economic Growth
•
Keep taxes low and restrain federal spending
– Plans to cut the deficit in half by 2009
•
Reduce America’s dependence on foreign oil
– President signed the energy bill to promote energy conservation and better
technology
– Oil exploration in the Arctic National Wildlife Refuge
•
Education system must prepare the next generation of American workers
– Expand the No Child Left Behind (NCLB) Act and Pell Grants
•
Develop a healthcare system that will confront costs and create choice
– Creation of Health Savings Accounts and proposal of Association Health Plans
– Medical liability reform
•
Confront problems with Entitlement Programs
– Failure to control entitlement spending can become a drag on the entire
economy
•
Promote trade agreements to bring American goods to more foreign markets
– Honor the policies espoused by the Doha trade negotiations
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.
“The National Innovation Initiative has
established a clear linkage between
innovation and America’s long-term
prosperity.”
- Duane Ackerman, Chairman and Chief Executive Officer of
BellSouth Corporation and Chairman of the Board of the Council
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.
China’s Innovation Policy
 The Ministry for Science and Technology has translated
Innovate America and made it required reading in various
ministries, as well as other levels of government, across
China.
 The theme of “innovation” is a critical one for the
Chinese Premier and Ministers. In fact, innovation will be
the key topic of a major internal meeting this November
(consisting of the Premier, ministers, governors, vice
ministers, etc.) to develop national plans and programs
across China for the next 20 years.
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.
Council on Competitiveness
National Innovation Initiative
Bill Bates
Council on Competitiveness
202.969.3395
bbates@compete.org
NII Final Report, Innovate America, available online at:
www.innovateamerica.org
and
www.compete.org
Copyright © 2005 Council on Competitiveness. No reproduction without express consent of the Council on Competitiveness.