Changes in Innovation Ecology

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Science  01 Jun 2007:
Vol. 316, Issue 5829, pp. 1253
DOI: 10.1126/science.1145598

Globalization has introduced both uncertainties and opportunities worldwide. In the United States, a flurry of recent books and reports has told the country how to be competitive in the 21st century, from Thomas L. Freidman's The World is Flat, to the National Academies'Rising Above the Gathering Storm, and at least a dozen more. All note the historic strength of the United States in innovation and suggest that reinvigorating this capability is key to future prosperity. The resulting recommendations relate to an ecology of interrelated institutions, laws, regulations, and policies providing an innovation infrastructure that entails education, research, tax policy, and intellectual property protection, among others. Unfortunately, this ecology is more fundamentally broken than is generally recognized.

It's broken for two reasons. First, its components were created in the context of old technologies, not new or future ones. Second, our processes for updating them are incremental, and we don't stand back and ask whether our changes are achieving the intended outcomes. It isn't obvious, for example, that a patent system created for macroscopic physical machines is ideal for computer software, snippets of DNA, or business processes. A year ago, 30 Silicon Valley chief technology officers told me that the U.S. patent system was irrelevant to the original Constitutional intent to encourage innovation. Although their fast product cycles make them skeptical about decadal protection, their reaction shows that a system invented for an old technology won't necessarily fit a new one.


Also seemingly antiquated is a Web page with the copyright symbol on it. That page was copied, in its digitized form, at least a half dozen times on the trip from its server to the screen; indeed, it would have zero value if it hadn't been copied. Of course the author didn't mean to prohibit those copies, but they are indistinguishable from the others that the author did mean to prohibit. Ironically, we must break this law to achieve one of its primary objectives. The notion of prohibiting copying to protect artistic and literary creativity made sense when those values were expressed in physical media, but it makes no sense in a digital world.

A serial medical entrepreneur pointed out to me that the nation's gold standard of randomized double-blind clinical trials to ensure drug safety and efficacy simply doesn't work for therapies that are tailored to a small population of patients, an emerging trend in drug development. In those cases, a traditional clinical trial will lack the statistical power to reach a conclusion. It will surely be ironic if a mechanism intended to protect us has the effect of preventing access to more effective drugs.

The antitrust laws are important for innovation. They create spaces in which small innovative companies can compete. Unfortunately, those in the United States were written in an era when scarcity usually determined economic value. In some fields today, it's ubiquity that sets value. For example, if I have the only telephone in the world, it has little value. Conversely, I use Microsoft software primarily because its ubiquity maximizes the probability that I can exchange documents with someone else. It shouldn't surprise us that laws based on assumptions that worked in a traditional industrial economic setting don't work perfectly for new technologies.

Although many commentators are ready to accept or even praise the loss of U.S. manufacturing to low-wage countries, production and marketing experts indicate that the future of manufacturing is not mass production, but mass customization. The key will not be the capacity to make a zillion size 10 D shoes (my size), but manufacturing shoes to suit Bill Wulf's size, color, and style preferences. This is a knowledge-intensive business; one in which we are well equipped to compete. But we need the right institutional and policy ecology to do so.

In each of these examples, the policy goal is still valid: protecting the public from unsafe or ineffective drugs, for example. It's the implementation that needs to be updated, and that can't be done incrementally. To prosper, we need an international process that can, time after time, fundamentally rethink the elements of our innovation ecology.

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