Thursday, January 20, 2011

Investing in Innovation

James (of the giant corn) recently posted on George Will's column on why we should be maintaining (or increasing) basic science research funding despite the economic downturn.*


Some people have the annoying habit of repeatedly dismissing the economic and public benefit of federal research funding. As an industry scientist, I thought I'd give my two cents.

My industry
The big multinational seed companies are a lot like the big automobile companies - they sell a suite of proven products to a well-defined set of customers each year, they continue to make incremental improvements in each product line each year and occasionally introduce a new product that incorporates a revolutionary new technology or attempts to capture a new market. Customers tend to stick with what has worked for them in the past - often until they see their neighbors doing better with something different. You can see part of this process where farmers post signs on the edge of their fields advertising the "make" and "model" of their crop. And just like with the automobile companies, you can go to their websites to see which varieties have the specs you need.

Innovation
These big companies are enmeshed in an ecosystem of small and medium-sized companies, startups, non-profits and public sector agencies and universities. While some companies like to remain vertically integrated, others outsource many of the more tangential operations (e.g. services and specific manufacturing processes) to allow them to focus on what they're best at. From what I've heard, some of the biggest seed companies are now following the new pharma model of outsourcing much of their early stage research altogether. This allows them to focus on their most critical day to day concerns - while buying/licensing new technological innovations (or the entire small companies that invented them) as they appear useful.

These small companies and startups are an important part of the interface between academia and industry - and often between basic research and the public good. While there are many paths by which a great new idea can move from an academic lab to the real world, it's almost never as simple as publishing the new discovery in a academic journal or filing a patent.

Million dollar ideas are a dime a dozen
I've heard a number of serial entrepreneur-types express that "ideas are cheap." One now-professor at Cornell once went to far as to describe the existence of a giant book full of nothing but brilliant (presumably patented) CU inventions that no one ever did anything with. This idea feels very foreign in the U.S. The lone, brilliant inventor is an important American archetype: mythic figures like Edison are often pictured laboring in isolation to produce groundbreaking technologies that single-handedly changed the world. And as Emerson is often quoted; "build a better mousetrap, and the world will beat a path to your door."

Except he never said that...
Emerson, eventually misquoted by a journalist, actually said "I trust a good deal to common fame, as we all must. If a man has good corn, or wood, or boards or pigs, to sell, or can make better chairs or knives, crucibles, or church organs, than any body else, you will find a broad, hard-beaten road to his house, though it be in the woods." This is much closer to the reality of innovation - it takes a lot more than an idea.
To hammer home the point, Andrew Hargadon (UC Davis Center for Entrepreneurship) elaborates:
"Since the US patent and trademark office opened in 1828 it has issued over 4,400 new mousetrap patents. Jack Hope, writing "A better mousetrap," (in American Heritage, October, 1996) reveals that of some 400 new patent applications each year, the USPTO grants roughly 40 new ones. Yet only two dozen have made any money and only two designs have ever dominated the market. The most common mousetrap design is the snap trap. Victor, the largest manufacturer, still sells more mousetraps than the rest of the market combined and has been doing so since it first patented and introduced the snap-trap in 1897. The second design is the sticky trap, which hit the market in the 1970's and uses industrial adhesives to catch the mouse.  As the numbers show, better mousetraps don't amount to anything."
And Edison? He didn't invent the lightbulb. Again, Andrew Hargadon:
"By the time Edison introduced his light bulb, there were already dozens of manufacturers selling electric lighting. These were isolated systems that included generators, wiring, and bulbs, and were is use in ships, hotels, office buildings, and public parks (New York’s Central Park and Brooklyn Bridge were already lit in this way).  But the limitations of these existing systems were clear—they required skilled engineers to maintain the steam engine and generators; they worked only when all the lights were on; and the market was crowded—and self-limited—with independent and competing systems. 
Edison saw the potential of the idea of electric lights and also the limitations of the current systems on the market. He began by trying to improve on just the light bulb—experimenting with ways to make it work better with these existing systems. But soon after starting, he recognized that the entire system was the problem, and envisioned (literally and strategically) a new network that put the technical complexity of electric lighting in a central location and simply sold power to those who wanted lighting, but not the cost and effort of maintaining their own systems. 
To Edison, the network was the innovation. 
His success in creating the first and prototypical electric utility corporation reflected his ability to first see and then create a new network reconnecting the resources—the people, the ideas, and the technical artifacts—of the existing electric lighting industry as well as others from the venture finance community (including J.P. Morgan) and from the gas lighting and telegraph industries." 
Hargadon goes on to point out that some of the biggest tech success stories of our time fall into this same category: Facebook wasn't the first social networking site, Google wasn't the first search engine, and Apple didn't invent the computer, mp3 player or smart phone. These companies all succeeded on the trivialities of "business" that scientists often disregard for the purity of invention. I actually find this idea very reassuring. You'll get discouraged pretty quick trying to invent the next once-in-a-generation technology, but anyone can recognize a technology that's almost ready for a market and work to bridge the gap.

Making new things
Back in academia, we thought industry science was just awash in money since companies seem to think nothing of dropping millions of dollars filling rooms with expensive machines and sequencing genomes for their own personal use. Resource availability doesn't equal profligacy however, and even small things often require detailed justification. Lots of companies don't even pay for literature access (another reason to support open access). And (unlike in academia) the value of time (in both salaries and opportunity costs) is rarely underestimated - which means when you successfully pitch a project to your boss, you need to get the proof of concept done, on budget, FAST. This isn't for no good reason either - wandering around in the scientific wilderness of basic research rarely pays for itself.**

I've been told that small companies specializing in innovation should look for ideas that are 95% ready for commercialization and take them the last 5%. While this may sound parasitic on academia, it's only because we make the mistake of attributing technological breakthroughs almost solely to the person who "invented" it.

Turning an idea into something real takes a lot of knowhow, creativity and hard work - it doesn't just happen on its own.



* Much of Will's post references "Rising Above The Gathering Storm, Revisited." I haven't read this "revisited" version yet, but the original RATGS was widely accused of contributing to the commodification and devaluation of grad student and postdoc labor (by calling for training more grad students, who already graduate in numbers grossly exceeding the availability of good jobs). It's self-destructive to increase the availability of research funding while not simultaneously increasing the number of academic and government professorships and facilitating industry investment in scientific personnel.
** Basic research is the engine of scientific progress because the most groundbreaking advances have the nasty habit of popping up in studies completely unrelated to their eventual target application. It's also important because it provides the foundation of knowledge that all practical work depends on. It drives me crazy when people suggest that the DuPonts of the world should do their own basic research because it simply won't get done (and even if it did, I can't build something useful from information squirreled away in some other company!). The cost in taxes is just a drop in the bucket, and it's essential to produce the new technologies that enable our whole way of life. All of the commercial R&D I'm championing here is completely dependent on a vibrant and open basic research sector.

2 comments:

  1. Fantastic post. As an industry biologist, I endorse this post.

    ReplyDelete

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