Eric Schmidt, CEO of Google published an article on Tuesday in the Washington Post  titled ‘Erasing our innovation deficit’ in which he argues for a fundamental rethink of America’s innovation model.

Schmidt’s concerns appear to be motivated by his observation that much of the cutting-edge research and development in key areas such as renewable energy now takes place outside the United States. His fear is that there is now a ‘real chance that the “green Silicon Valley” will take root in Germany or China’. This he argues America cannot afford to let happen.

There is truth in this observation as I have noted in previous posts about the nature of the R&D taking place in Asia. And there is much to agree with in his call for ‘encouraging risk-taking’ and tolerating ‘failure — provided we learn from it’. One of the key principles in the Big Potatoes Manifesto argues for precisely this approach. But there are some assumptions in his piece that are debatable if not plain wrong. The most glaring contradiction is his appeal for openness and data sharing and bottoms up innovation…provided this happens in American not Asia.

Coffee shops vs big corporate labs

In arguing for an overhaul of America’s innovation model, Schmidt makes the same point as many others about open innovation and the impact of the Internet. He argues as follows:

‘We can no longer rely on the top-down approach of the 20th century, when big investments in the military and NASA spun off to the wider economy. Now that the Internet has put abundant information and powerful tools in everyone’s hands, innovation is often driven from the bottom up. The ideas that power our next generation of growth are just as likely to originate in a coffee shop as in the laboratory of a big corporation’.

It is certainly true that the Internet and the greater availability of data has enormous potential for the kind of collaboration that may result in breakthrough innovations in the future. But what he fails to point account or even credit, is that today’s bottom up philosophy exists because of the very top down investment Schmidt now considers outdated. Indeed, Google would not exist if it were not for this past investment and approach. That is not to say that history must necessarily repeat itself. But to dismiss this or to counterpose this to coffee shop collaboration is to throw the baby out with the bath water.

What makes bottom up innovation more a possibility today is the legacy of yesterday’s top down R&D models which are now dismissed as old-fashioned. This is historic myopia because we are now living off that legacy with no clear replacements available.

Yesterday’s top down approach was critical for providing the context within which breakthrough innovations took place – from corporate labs to garage inventors. President Kennedy’s pledge to put a man on the moon, ‘because it is difficult’, created the context within which big ideas, risk taking, solving new problems, discovering new fields of science and knowledge became a legitimate and honourable pursuit – a pursuit, it should be noted, which required expertise, systematic application, long-term resources, experimentation and yes, a culture of failure. This inspired generations of young people to study mathematics, physics, chemistry and computer science.

The problem Schmidt evades is that this is very unlikely to happen in corporate labs today, because they are subject to a more risk-averse and short-term financial instrumentalism that constrains what is possible.

Its the context, Eric

An innovation model requires an innovation context. This is precisely what is missing from today’s debate about innovation. The problem with American innovation is that it now takes place within a cultural context which is driven by short-term market instrumentalism, is risk averse and above all, defined by limits that are no longer challenged. The kitchen table innovator and the researcher in the corporate labs of tomorrow (those that still remain, that is) will be condemned to dabble within this culture of limits. The result in both cases will be a race to the bottom rather than a struggle to the top.

How to take advantage of the collaborative resource we have at our finger tips while raising expectations, ambitions and challenging our risk averse culture of limits seems to be the real challenge which Schmidt only partially focuses on. This will not happen spontaneously. It requires leadership and heretically Big Ideas. Without that a government ‘wikipedia of idea’, as Schmidt demands, will only reinforce the narrow scope of contemporary efforts, expectation and ambition…and keep out the Chinese? Not very open Mr Schmidt.


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