During the first hundred years of the republic, there was little
need to promote discovery, invention and innovation because
technology could be adapted from England. Nevertheless,
educational
developments in the first hundred years created the foundation for
a
much higher rate of discovery, invention and innovation in the
second
hundred years. These developments were public primary and
secondary
education in the industrializing states and research
universities.
During the second hundred years the rate of invention was
increased
by the creation of corporate research and development. In
addition,
federal funding of research after WW II, especially through the
National Science Foundation, NSF, further stimulated discovery.
While
NSF funds basic research, government departments such as the
Department of Energy and the Department of Defense fund applied
research directly leading to invention.
Another US institutional innovation is the concept of a startup,
which is a small company specializing in new technology. Most
startups
fail; however, enough succeed in becoming Fortune 500 companies to
create powerful incentives for entrepreneurs. Startups are
financed by
another US institutional innovation, venture capital. Venture
capitalists pool their resources and invest in a large number of
startups with the expectation that all it takes is one success to
become rich. Also, in 1984 the government relaxed the antitrust
laws to
allow firms to form consortia to promote invention. Consortia are
also
useful to establish industry standards which promote the industry.
Another institutional innovation has been the creation of incubators
that
help promote startups in their initial stages of development.
Currently, there is a considerable effort to increase the rate of
technology transfer from both university and government research
laboratories to the marketplace.
Surf the Internet: Check out two examples of
corporate R &D:
To study what NSF does to promote discovery, click
here. Much of
the
information presented is for researchers in order to process
their
research proposals. Other information lauds the accomplishments
of
NSF.
To check out applied research sponsored by the Department of
Energy
check out their Office
of Industrial Technologies. This office focuses
on
reducing energy use in various industries. The Department of
Defense
has Defense Advanced Research Projects Agency, DARPA to
promote research related to weapons.
In 1988 Congress initiated several programs to advance
automation. A program to promote technology in small
manufacturers is
the Manufacturing Extension Partnership under the National
Institute
of Standards and Technology (NIST). To check this program out
,click
here.
An important aspect of our competitiveness is how fast we can
transfer ideas from university and government labs into the
private
sector. To view some resources on this topic click on
Since 1984 innovators have created numerous consortia to promote research on joint projects and the development of industry standards. Check out the following:
Many private consulting firms earn their revenues by promoting
innovation and imitation in their public and private clients.
The
following list gives such a sample of the various types of
consulting
firms:
Go to the Smithsonian Institute Technology,
Invention,
and Innovation Collections
that provides numerous examples
of innovation.
To return to the notes remember to click back
at the top of your screen. You may have to click
several times depending how deeply you delve into the NSF files.
Alternatively, you can pull down the GO menu
at
the top of your screen and click on the site you want to make
active.
Much less progress has been made to stimulate innovation.
Currently
worldwide economic competition is based on the rate of discovery,
invention and innovation. The US is currently weak in the area of
manufacturing innovation; however since the mid 80s progress has
been
made in catching up to the Japanese. We have copied many of their
innovations such as creating design teams with members from all
departments of the firm and with the power to make decisions. Most
promotion of innovation takes place in the private sector by
consultants who aid firms and government agencies in implementing
innovation and imitation. Also, to aid in imitation of
innovations,
organizations have been created which collect files on the best
practices in each industry. They act as clearing houses
disseminating
the information to imitators.
Surf the Net Check out several organizations
which promote benchmarking:
Both inventions and innovations require much applied research to
achieve their market success and their potential performance
respectively. An important aspect of this applied research is the
learning strategy. A simple learning strategy is an
improvisatory strategy which is a trial and error approach
to
learning how to achieve market success in an invention and better
performance in an innovation. In the 19th century most invention
was
by trial and error methodology, that is improvisatory methodology.
An
improvisatory strategy for innovation means the innovator is
simultaneously trying to learn and achieve performance at the same
time. For example, GM in installing new automation equipment in a
factory must simultaneously learn how to effectively use the new
machinery and produce autos for sale at the same time. In an
improvisatory learning strategy for innovation, the participants
are
limited in how much experimentation they can perform to achieve
better future performance. This is especially true in government
innovation where equal treatment before the law effectively
eliminates variation in administration.
A better learning strategy is a separation strategy which
requires separating the learning activity into a formal research
setting. For example, corporations currently develop new products
in
research and development laboratories. In agricultural innovation
research is performed at research stations before the results are
transmitted to farmers. The second strategy provides a systematic
approach to the learning aspect of invention and innovation. An
example of a systematic approach to learning is the use of
statistically designed experiments to test the affect of
variations
in fertilizer application on crop yield. Currently most invention
is
done using a separation strategy; however most innovation still
uses
an improvisatory strategy.
Surf the Internet: Check out USDA
research
and science
An important empirical fact to remember in the pursuit of wealth
is that existing large firms seldom are capable of making a major
shift in technology. For example, the railroad firms did not
create
automobile divisions to shift from one form of transportation to
another. Why is this? The management of a large firm in an
existing
technology has invested numerous man years in understanding the
business of the existing technology. They have no expertise in the
new technology and if the shift in technology is large enough,
their
knowledge of the existing business actually impedes their learning
the new.
New industries usually evolve out of a large number of startups.
Most
of these startups fail. Some are bought out by larger firms
wishing
to enter the new industry. A few become corporate giants as the
industry matures.
As new industries rise, they displace older industries. Moreover,
in
the world economy as less developed countries master the skills of
advanced country industries, the advanced countries must
constantly
be creating new industries to prosper.
The constant advance in technology creates countless
opportunities
for those ambitious enough to become entrepreneurs. On the largest
scale is the creation of a whole new industry. Another major
opportunity is the creation of a new service. Much more plentiful
are
opportunities to create a new niche market.
Now as economists it is extremely unlikely that any of you are
going
to invent a new product which creates a whole new industry.
Nevertheless, many successful enterprises are started by teams. At
Apple Computer, Jobs was the entrepreneur and Wozniack was the
inventor of the Apple line. At Hewlett Packard, Hewlett was the
engineer and Packard was the businessman. In a successful startup
the
first 15 people in the door end up millionaires. In the case of
Microsoft the first two ended up billionaires. So one possible
route
is to team up with a creative engineer or software type who does
not
like the business side.
The advance of technology creates hundreds of opportunities to
perform some service in a new improved manner. One former UT
student
became a millionaire by creating a service to tell whether houses
or
businesses were in the one hundred year flood plain. He ran the
business through fax machines. Dell's success is due in part to
his
marketing strategy of selling computers by mail, telephone and now
the internet.
Currently as the Net becomes secure, a very large number of
businesses will shift to the Net. Could you think up a possible
successful business on the Net? If Java becomes popular as a
language, you could create a niche business renting software for
specified time periods.