A Proposed NSF for Innovation

For generations, America has led the world in innovation. But that dominion is faltering. It’s not gone, just stumbling. As a host of blue-ribbon commissions have reported, the United States has been losing ground in categories key to innovative strength. These include U.S. spending on research and development (as a share of global investments in these areas), not to mention the U.S. share of all science papers produced and researchers at work around the world.

What hasn’t dropped much is the share of new U.S. patents. It still hovers just above 50 percent of all patents issued globally.

The problem is that although plenty of good ideas are born in the U.S.A., their development and commercialization increasingly have been moving overseas. With that emigration of technologies has gone jobs and potential domestic income.

Last week, two researchers affiliated with the Brookings Institution in Washington, D.C., published a blueprint for tackling what they perceive as a brewing innovation crisis. They propose that Uncle Sam create yet another federal agency. This one would focus squarely on helping home-grown companies increase their innovation, productivity and profitability.

Sure, there are perhaps 200 federal programs that tackle aspects of innovation, but they’re scattered throughout the government. This would for the first time coordinate most of them under one roof. I say most of them because the Brookings researchers would leave programs dealing with energy technologies, agriculture, and a few other sectors alone. Those would continue to be managed by existing federal agencies. But the rest would be consolidated under the management of perhaps 200 to 300 employees and a $1 billion budget.

NIF would also take on more than the traditional brick-and-mortar industries that have been the focus of previous innovation-fostering programs, such as the Manufacturing Extension Partnership, which is run out of the National Institute of Standards and Technology. The new National Innovation Foundation, by contrast, would include a focus on service innovation, something that’s been ignored by existing federal programs.

”Since about 80 percent of the U.S. economy is outside of manufacturing, mining, and construction, we should be starting to think more seriously about productivity improvements in that huge part of the economy,” argues Brookings economist Howard Wial, an author of the new report. Now dominating? Service industries, which include education, health care, travel reservations, computer repair and networking, software creation, sales (including those processed through catalog centers and online venues), restaurants and hotels — even journalism.

Owing to NIST’s experience with managing industrial-innovation programs, Wial and coauthor Robert D. Atkinson of the Information Technology and Innovation Foundation (and a nonresident senior fellow at Brookings) have proposed it as a possible home for NIF. This new agency would be subject to lots of accountability and oversight as part of NIST, Wial maintains.

I’d argue, however, that NIF might stand a better chance of succeeding if it were not put under NIST’s umbrella. Although NIST does much important work, it isn’t very flashy and doesn’t appear to have many guardian angels in Congress. As such, its funding seldom sees the increases of other research-and-development agencies, despite performing research that is arguably among some of the most critical in the government.

NIST’s programs have frequently been targeted for elimination, and all-too-often just barely hold on. The latest instance: Earlier this year, the Bush administration asked Congress to whittle the budget for the NIST’s $90-million-a-year manufacturing partnership program to just $4 million. Having worked with thousands of manufacturers during its nearly two-decade history, the partnership had finally grown to where it’s been delivering $1.3 billion in cost savings annually.

You do the accounting. How does axing such a program help our nation and its declining balance-of-payments problem in the global marketplace?

Instead, I prefer another of the Brookings team’s suggestions: Make NIF a stand-alone agency like the National Science Foundation. Admittedly, Wial says, such independent status “would give it more flexibility and visibility than if it were at NIST.” It would give the new agency’s focal mission – improving the competitiveness of U.S. industries and keeping well-paying jobs at home – more focus. Think of it as an industrial Department of Homeland Security. Only here we’d be focusing on keeping U.S. jobs secure and strengthening the economy.

As for what NIF would do, Wial envisions it performing a bit like NSF. Instead of telling researchers what to study or invent, it would let industries or the R&D community identify technology or operational gaps and then have them propose research to tackle the problems. Grants would be selected by committees of experts, not bureaucrats.

Some money would likely go to state agencies or regional clusters of companies in a common industry – like boat builders or meat packers. In these instances, however, Wial and Atkinson envision their new agency parceling out funds on a 1:2 matching basis with local financing.

It’s way too early to tell whether this idea will fly. Indeed, although Wial and Atkinson have already got some positive interest from Congress, it is an election year. So reorganizing dozens of programs across a host of federal agencies under one umbrella won’t be high on anyone’s agenda until after the elections. But Wial holds out hope that our lawmakers will start taking the issue of waning innovation seriously.

Me, I’m all for NIF – especially if it can figure out how to increase my productivity by reducing the hold times I encounter when dealing with “service” providers on the phone.

Take the time, last year, when I tried to investigate an alternate cable service. After 40 minutes, 4 dropped calls, and talking to five different customer-service representatives, I gave up. Or how about the time, this winter, when I called to find out why my airline reservation had never been ticketed, despite my getting a confirmation number and having given the company a valid credit card. Roughly 40 minutes later – and shunted around a call center in India – I learned it was a slip-up for which the company was very sorry. And despite three long phone calls and several emails via an online portal, I still haven’t been issued the promised refund for a defective mail-order DVD I received 7 weeks ago.

I suspect that if Wial and Atkinson pitched their proposal as an agency that could cut call-holding waits by 75 percent or promise tech support operators would offer guidance from somewhere in North America, the NIF proposal would win near-immediate support from both public and those bean counters on Capitol Hill.