Improving Innovation Across North America – Brad Ashton

By W. Bradford Ashton, Ph.D.

From Remarks Prepared for the “Forum on Advancing Innovation across North America” The Pearson Centre for Progressive Policy Ottawa, Ontario

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 Key Challenges Facing Canada, Mexico and The United States to Advance the Science Enterprise at The National Level

In general, “innovation” is thought of as “doing new things in new ways that create value” and is the basic process that is the foundation for development of new products, processes, organizational changes, industries and economic growth.  While innovation is the heart of useful change in our lives, it is only part of what happens to create that change.  For example, innovation is proceeded by basic “invention” activities.  Innovation is not the same as invention.  Innovation involves deliberate application of information, imagination and initiative to produce greater or different values from resources and includes all the activities by which new ideas are converted into useful value. Invention is focused on creating something entirely new that has not been made before.  These concepts are also distinct from notion of “discovery”, which is the process of finding or creating new knowledge about phenomena, actions, or events.  ……….. Innovation is also not the “back end” of the new developments. After the innovation process has been executed, final changes for application of new idea in markets and organizations involves marketing and distribution, which bring new change to customers and users.    

While, invention is the “front end” act of creating new ideas, concepts or practices, innovation is what happens to bring those new creations into everyday use and to commercial practice – to the market where customers will pay for a product or service.  Innovation is focused on providing something new for customers or users, while invention is focused on creating something new for innovators.  In summary, innovation is the adoption of a new practice, process, or paradigm by a community — not just a new product or service. It is “adapting, adjusting, or altering that which already exists for the purpose of adding value.”

It is well known that “being innovative or creating innovations” is difficult.  Many efforts have been undertaken to establish or enhance innovation, but often these are either not successful or short lived.  Some of the biggest challenges to fostering innovations include: 

  1. Developing and maintaining an innovation-oriented culture.  Organizational culture is the sum total of values, norms, assumptions, beliefs and ways of living built up by a group of people and transmitted from one generation to another.  Key aspects of this culture include an emphasis on organizational “learning”, being open to change and to new ideas that break existing ways of doing business.  
  1. Managing and using empirical data in innovation decision making – An increasing inventory of all sorts of data are now easily available via on-line sources.  Obtaining, screening, organizing, storing, analyzing and communicating data and related insights represent an important opportunity to increase the foundations for evidence-based innovation and decision making.  
  1. Killing new projects or developments that are not likely to pay off in the long run – One of the most difficult actions in research and development (R&D) is to terminate a funded project that is not making sufficient progress.  When progress is slow, a common response is “We just need more time and resources to make this work.”  But, terminating unproductive investments does not often happen before it is too late and important resources are wasted. 
  1. Finding and keeping high quality talent – Innovation requires creative, energetic and committed people with a variety of backgrounds.  Finding and engaging these kinds of individuals is a challenging aspect of all innovation.  
  1. Establishing and implementing incentives to promote and sustain innovation – Motivating invention and follow-on innovations is possible only in the presence of suitable incentives – rewards and penalties – that stimulate innovators to create and produce.  

Successful Initiatives to Advance Science and Innovation in The United States 

Most superior initiatives for advancing innovation involve the management processes for motivating and overseeing development of new ideas, not just the resourcing investments to stimulate and support change.  Many approaches to new innovation initiatives have been attempted.  Good examples of some successful approaches to promote innovation in the U.S. include: 

  1. Open Innovation (https://en.wikipedia.org/wiki/Open_innovation) – Open Innovation involves a process where organizations expand and offer their research and development challenges to a wider technology community, specifically to small and medium sized businesses and University technology transfer offices, which may have the capability to resolve these challenges in a novel or more cost effective way.  The benefits from adopting this process include: reduced R&D costs, shorter development cycles and importantly, access to a broader church of innovative minds.  For specific sectors, the challenges can be “market focused” challenges.  IP is protected, for both supply and demand side organizations, by the provision of non-disclosure agreements (NDAs) prior to any information exchange if required.
  1. Technology Scouting and Intelligence (http://www.innovationmanagement.se/imtool-articles/technology-scouting-rethinking-the-innovation-toolbox/, https://www.amazon.com/Keeping-Abreast-Science-Technology-Intelligence/dp/1574770187)- Horizon scanning for emerging technologies is crucial to staying abreast of external developments that can radically transform our world, enabling timely expert analysis in preparation for these potential disruptors. The North American community needs to come together and implement approaches to reap the benefits and hedge the risks of emerging technologies.  Scouting is a form of competitive intelligence (CI) which is the process of gathering of publicly-available information about an enterprise’s competitive environment and using of that information to gain a business advantage.  For technology advances, competitive technical intelligence (CTI) is analytical information about external business (S&T) developments and trends that can affect an organization’s current and future competitive position.  
  1. Focused “Front-end” Funding Support (http://www.energy.ca.gov/research/innovations/):  A number of U.S. federal and state governments provide financial support to “front end” or early development technologies.  Programs like Energy Innovations Small Grant (EISG) Program of the U.S. California Energy Commission (CEC) provide early project funding for hardware and analysis/ modeling projects to small businesses, non-profits, individuals and academic institutions to conduct research that establishes the feasibility of new, innovative energy concepts.  As a “proof-of-concept” program, EISG seeks out concepts that are not yet proven and are very early in the research pipeline – so early that even angel investors may not yet be willing to invest. The program encourages technical innovation and risk taking by focusing on innovative concepts at the very early stage of development with the goal of uncovering a few good ideas and starting them on the path of development – ultimately leading to ratepayer benefits and development of new technologies that will benefit the California economy.
  1. Stage Gate Innovation Project Management (http://www.prod-dev.com/stage-gate.php): Structured yet flexible project management decision making is essential to effective innovation, especially when innovations are complex.  Use a stage gate-type oversight process can be a valuable management tool.  This management approach establishes and implements a set of successive performance milestones that are used for periodic formal reviews of innovation investments to measure and assess progress along with potential business value.  Developments that do not meet stage-gate milestones cease to be funded or are redirected – they are killed in favor of other projects that show more promise.  

Suggestions to Improve Cross-Border Cooperation on Innovation for North America

The general practice of “joint – cross border collaboration” is a major theme of North American innovation, and the practice is critical to integrated success by the three North American nations.  However, collaboration needs to be practiced in the right manner to be successful.   Many domestic and international collaboration efforts have failed for a variety of reasons.  To mitigate against failures, the most successful collaborations have incorporated the following key elements: 

  • Well-defined potential benefits for each party.
  • Clear roles and responsibilities for each party.
  • Openly established incentives to motivate high quality work. 
  • Regular communication about problems, difficulties before they become too serious. 
  • Mechanisms to ensure accountability by each party.

Cross border cooperation must account for both near term and long term innovation activities.  Innovation cannot be turned on and off like a water faucet.   Once a commitment is made, it is important for participants to see it through – or change based on substantive, not political, reasons.  Collaboration investments must be shared by the 3 nations in appropriate ways – not necessarily in equal shares, but shares established based on other aspects of contribution such as facility / equipment use, in-kind labor participation and contributions of other resources.    

A key to collaboration is the type and structure of organizational arrangements used to implement it.   Three examples of successful government collaboration initiatives from the U.S. that could be adapted for use across North America include:

  1. CRADAS (http://www.nist.gov/tpo/collaborations/crada.cfm)– a Cooperative Research and Development Agreement (CRADA) is an agreement between a U.S. government agency and a private company or university to work together on research and development.  The purpose of a CRADA is to speed commercialization of technology, optimize allocation and use of resources, and protect the private company involved. A CRADA allows both parties to keep research results confidential for up to five years. Private corporations participating in a CRADA are allowed to file patents, and they retain patent rights on inventions developed by the CRADA. The government gets a license to the patents.  
  1. SBIR Program (https://www.sbir.gov/) – The Small Business Innovation Research (SBIR) program is a competitive U.S. federal funding program that encourages domestic small businesses to engage in Federal Research/Research and Development (R/R&D) that has the potential for commercialization. The mission of the SBIR program is to support scientific excellence and technological innovation through the investment of Federal research funds in critical American priorities to build a strong national economy.  Through a competitive awards-based program, SBIR enables small businesses to explore their technological potential and provides the incentive to profit from its commercialization. By including qualified small businesses in the nation’s R&D arena, high-tech innovation is stimulated and the United States gains entrepreneurial spirit as it meets its specific research and development needs.  
  1. ARPA-E ((http://arpa-e.energy.gov/sites/default/files/ARPA-E_Strategic_Vision_Report_101713_0.pdf). – The U.S. Department of Energy’s Advanced Research Projects Agency-Energy (ARPA-E) program advances high-potential, high-impact energy technologies that are too early for private-sector investment. ARPA-E supports America’s energy researchers with funding, technical assistance, and market readiness. Projects have the potential to radically improve U.S. economic prosperity, national security, and environmental well-being. We focus on transformational energy projects that can be meaningfully advanced with a small investment over a defined period of time.   America’s energy researchers with funding, technical assistance, and market readiness. Rigorous program design, competitive project selection process, and active program management ensure thoughtful expenditures. ARPA-E Program Directors serve for limited terms to ensure a constant infusion of fresh thinking and new perspectives. 
  1. R&D Tax Credits (https://www.irs.gov/pub/irs-utl/cost_capturing_approaches_2004-05-24.pdf) – The Research & Experimentation Tax Credit, or R&D Tax Credit, is a general business tax credit under U.S. Internal Revenue Code for companies that incur research and development (R&D) costs in the United States. The R&D Tax Credit was originally introduced to stimulate private investment in R&D.  Since the credit’s original expiration date of December 31, 1985, the credit has expired eight times and has been extended fifteen times.  In 2015, Congress made the research and development tax credit permanent.

Using these and other initiatives to promote innovation, an important strategic message for each North American nation is to “experiment” with different organization arrangements – trying new ideas and programs to see which ones work best for the culture and current circumstances of each nation.  

Collaboration should focus on topics of clear mutual interest to the three North American nations.   Some example topics for emphasis where the conditions for successful collaboration is possible are shown below: 

  1. Development of joint energy databases for information sharing –with joint contributions and individual access for use.  Energy databases for electric power and gas prices, use, production; advanced energy technologies, R&D activities and progress.
  2. Decarbonization and climate change management approaches, including penalties
  3. Cybersecurity – Cyberattacks from virtually anywhere are a universal threat to all the world and certainly North America, especially to energy systems such as the electric power grid.  Joint efforts to prevent successful attacks would benefit all three countries.  
  4. Strategies to control energy costs.
  5. Energy storage technologies. 
  6. Green energy technologies. 

Finally, a strong element of successful North American energy collaboration is the need for a shared process to generate ideas for joint investment and an open process to choose the most important joint investments, including a process to terminate investments or shift the focus of the development work.  With limited resources, countries must decide where to put emphasis and $ incentives.  

References

Ashton, W.B. and Klavans, R.C. (ed). 1997. Keeping Track of Science and Technology: Technical Intelligence in Business. Battelle Press. Columbus, OH. (https://www.amazon.com/Keeping-Abreast-Science-Technology-Intelligence/dp/1574770187)

Ashton, W.B. 1996. “An Overview of Business Intelligence Analysis Methods for Science and Technology”. Advances in Applied Business Strategy: Business Intelligence Theory, Principles, Practice and Uses. B. Gilad and J. Herring (eds). JAI Press, Inc. Greenwich, CT.

Advanced Research Projects-Energy (October 2013).   “Strategic Vision 2013,” (http://arpa-e.energy.gov/sites/default/files/ARPA-E_Strategic_Vision_Report_101713_0.pdf).

InnovationTools.com.  May 29, 2008.  What are the Most Effective Approaches to Drive an Innovation Pipeline? (http://www.innovationmanagement.se/imtool-articles/what-are-the-most-effective-approaches-to-drive-an-innovation-pipeline/).

29 Obstacles to Innovation (The Culture of Innovation) By: Mitchell Lewis Ditkoff

Christian Ralph, 2013. “Four Key Issues in Innovation Management”. (http://timkastelle.org/blog/2013/01/four-key-issues-in-innovation-management/).

Innovation?”  Forbes: The Little Black Book of Billlionaire Secrets.  (http://www.forbes.com/sites/jacobmorgan/2015/09/10/whats-the-difference-between-invention-and-innovation/#3810290145b4).

van Wulfen, G. December 4, 2015.  10 Ways to Reduce the Innovation Failure Rate”.  Web site: (InnovationTools.com).

Innovation Expert Panel.  “What are the Most Effective Approaches to Drive an Innovation Pipeline?”. (http://www.innovationmanagement.se/imtool-articles/what-are-the-most-effective-approaches-to-drive-an-innovation-pipeline/).

(Brookings Institute, 2014). Brookings Institute, May 2014, “The Rise of Innovation Districts: A New Geography of Innovation in America,” The Metropolitan Policy Program. (http://www.brookings.edu/about/programs/metro/innovation-districts).

(Breakthrough Energy Coalition).“Introducing the Breakthrough Energy Coalition” (November 2015) (http://www.breakthroughcoalition.com).

U.S. Internal Revenue Service. “Briefing Paper on Taxpayer Approaches to Capturing Costs for the Research Credit”. https://www.irs.gov/pub/irs-utl/cost_capturing_approaches_2004-05-24.pdf

 

Bradford Ashton is Senior Technology Management Advisor with Concurrent Technologies Corporation Arlington, VA, USA

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