Innovate America: Thriving in a World of Challenge and Change
A report by the Council on Competitiveness
Principals Committee Members
In October 2003, the Council on Competitiveness formed the National
Innovation Initiative (NII) with the goal of creating "a comprehensive
strategy to optimize our entire society for a future in which economic
growth, productivity, and personal prosperity - the pillars of competitiveness
- are increasingly linked to our capability to innovate." At
the head of NII was the Principals Committee, made up of 19 university
presidents and CEOs. This committee was supported by the 30-member
Advisory Committee, co-chaired by Norm Augustine, Retired Chairman
and CEO of Lockheed Martin, and William Brody, President of Johns
Hopkins University. Additional advice was provided by the Honorary
Committee, a group of 20 congressional representatives, administration
officials, and state governors.
The majority of the analysis was performed by seven working groups,
focusing on innovation skills, finance, infrastructure, the public
sector, research frontiers, trade and investment policy, and innovation
in the 21st century. After 15 months of research the working groups
released over 80 recommendations. The final priorities were selected
by the Principals and Advisory Committees and were first presented
at the National Innovation Summit on December 15, 2004. The recommendations
fall into three broad focus areas: talent, investment, and infrastructure.
Goal No. 1: "Build the Base of Scientists and Engineers"
The committee proposes a number of mechanisms to increase the number
of science and engineering students at the undergraduate and graduate
In order to increase undergraduate enrollment, particularly from
underrepresented women and minorities, the committee recommends the
creation of a national science and engineering scholarship fund entitled
"Investing for the Future." The fund would provide a scholarship
to any qualified math or science major who demonstrated financial
need and high levels of achievement. The government would provide
tax incentives to individuals and corporations who donate to the fund.
The committee also recommends fully funding the science and engineering
education incentives authorized in the 2002 NSF Authorization Bill.
At the graduate level, the committee recommends three tactics. First,
the government should create a merit-based, portable fellowship program.
Modeled after the NSF Graduate Research Fellowship Program (GRFP),
these grants would allow students to choose their research institution,
field of study, and area of specialization, rather than be tied to
existing grants. The committee recommends awarding at least 5,000
fellowships for up to five years at a stipend comparable to that of
the NSF GRFP.
Secondly, the committee recommends establishing traineeship grants
to academic institutions. These grants would focus on "frontier
research areas and multidisciplinary or innovation-oriented studies"
and would involve an element of exposure to academic, industry, or
government labs and research.
Finally, the committee recommends expanding the number of Professional
Science Masters (PSM) programs, a recently developed degree that combines
training in science and business skills. The government would provide
matching grants to institutions that establish PSM programs.
The last recommendation of Goal No. 1 is designed to maintain the
foreign talent pool in the United States. The committee recommends
establishing an expedited immigration process. This would include
providing automatic work permits and residency status for students
who have graduate degrees in science or engineering from US universities
and for students who have been offered jobs by US employers and have
passed security tests.
Goal No. 2: "Catalyze the Next Generation of American Innovators"
To promote an innovation-oriented culture in US universities, while
continuing to focus on basic research, the committee recommends a
number of curricular and administrative changes. Universities should
alter current tenure and promotion procedures to recognize professors
in technical disciplines who teach creativity, inventiveness, and
innovation. They should also develop multi-disciplinary curricula
that include innovation skills and emphasize experiential learning,
establish programs to teach innovation management skills to managers
from small businesses, and fund internships for students technology
students interested in local business environments. The committee
also recommends developing "Innovation Partnerships" between
academia, business, and government in order to catalyze the transition
from discovery to commercialization. Finally, the National Science
Foundation should fund new programs to create innovation education
and opportunities at the K-12 and higher education level.
Goal No. 3: "Empower Workers to Succeed in the Global Economy"
To increase the skill set and flexibility of the US workforce, the
committee recommends creating voluntary asset accounts for employees
to finance lifelong learning and training activities. Contributions
to the accounts by workers would be tax-exempt, and contributions
by employers would result in tax credits.
The committee also recommends increasing the portability of healthcare
and pension benefits. Employers should automatically enroll employees
into portable retirement plans, increasing the number of workers who
invest in retirement savings. States should offer tax incentives for
annuities, clarify annuity regulations and legal aspects of cash-balance
pension plans, help employers provide financial advice to employees,
and help expand the availability of Health Savings Accounts.
In order to support workers who lose their jobs due to new technology
and trade, the committee recommends reforming the Trade Adjustment
Assistance (TAA) Program to include workers in the service sector.
The TAA provides income support, training resources, health benefits,
and relocation assistance for displaced workers. Furthermore, federal
and state employment and training programs should devote more resources
toward high-growth and in-demand skills. Temporary wage supplements
should also be expanded so that younger workers can move quickly from
unemployment to new jobs and job training. The government should "re-institute
H1-B training grants to ensure that Americans are trained in the skills
and fields for which companies now bring in foreign nationals."
Finally, companies should offer training programs that encourage innovation
and commercialization skills.
Goal No. 1: "Revitalize Frontier and Multidisciplinary Research"
To increase frontier research, the committee recommends creating "Innovation
Acceleration" grants for high-risk exploratory research by reallocating
three percent of all federal R&D budgets. Additionally, the NSF
budget should be doubled and three percent of the Department of Defense
(DOD) budget should be allocated to science and technology. Of that
three percent, twenty percent should be reserved for 6.1 long-term,
basic research. Additionally, university funding should be allocated
to multi-disciplinary programs and "services science," a
discipline that combines computer science, operations research, mathematics,
social sciences, and legal sciences. Finally, the R&D tax credit
should be restructured and made permanent.
Goal No. 2: "Energize the Entrepreneurial Economy"
To increase innovation in the private sector, the committee recommends
creating at least ten "Innovation Hot Spots" - similar to
Silicon Valley and the Boston area - over the next five years. The
federal government should also develop a single lead agency to fund
regional innovation-based economic projects, provide a 25% tax credit
to companies making early-stage investments of at least $50,000 per
year, and clarify guidelines in the Internal Revenue code relating
to the investment of assets in start-up ventures. Finally, local and
national leaders should provide education for local businesses on
the positive regional impacts of entrepreneurial investments.
Goal No. 3: "Reinforce Risk-Taking and Long-Term Investment"
To reinforce risk-taking and long-term investment, the committee
recommends that corporate boards change their incentive and compensation
structures and that industry "initiate voluntary and supplemental
disclosure of intellectual capital, innovation performance and indicators
of expected future value." Business should also partner with
universities to learn about trends in technology, innovation, and
management, as well as to develop methodologies to asses the value
of long-term investment. Additionally, the federal government should
reduce tort litigation costs from two percent of GDP to one percent
'safe harbor' provisions to encourage the
disclosure of longer-term innovation strategies." Finally, a
public-private "Financial Markets Intermediary Committee"
should be created to asses the impact of governmental regulations
on investment in innovation.
Goal No. 1: "Create a National Consensus Supporting Innovation
To make innovation a legislative priority, the committee believes
it is fundamental to have a national consensus that supports innovation.
To that end, the committee recommends establish an explicit innovation
strategy led by the President and coordinated by either the Cabinet
or the National Economic Council. Additionally, leaders from industry,
government, and academia should partner to advocate for innovation-related
initiatives and to promote public support for innovation. New economic
metrics that include innovation criteria should be developed to measure
our innovative performance and national prizes that recognize excellence
in innovation should be established by the private sector.
Goal No.2: "Create a 21st Century Intellectual Property Regime"
The committee recommends a reform of the US Patent and Trademark Office
(PTO) to improve the quality of patents issued and reduce the time
to receive a patent. This reform would involve increased resources
for the modernization of patent examination and new post-grant review
procedures. PTO should also invest in making a subset of key patents
in the patent database searchable and should secure reciprocal rights
to search foreign patent databases.
Goal No. 3: "Strengthen America's Manufacturing Capacity"
To revitalize manufacturing in the US, the committee recommends creating
"centers of production excellence" These shared facilities
for high-tech manufacturing sectors would promote collaboration, attract
technical talent, and reduce individual costs. In addition, the Department
of Defense should work with industry to support breakthrough manufacturing
technologies. The committee recommends focusing significant attention
on the small and mid-size manufacturing sectors (SMEs) by establishing
innovation extension centers within the Department of Commerce to
provide innovation assistance to SMEs. Finally, industry should create
technology roadmaps to serve as the basis for public and private R&D
Goal No. 4: "Build 21st Century Innovation Infrastructures
- the healthcare test bed"
The committee's final recommendation is to use a reform of the healthcare
system as an avenue for developing new innovation infrastructure and
technology. Specific components of the healthcare reform would include
electronic reporting from hospitals and physicians to the Centers
for Medicare and Medicaid Services (CMS), the Centers for Disease
Control (CDC), and the Food and Drug Administration (FDA); health
IT "readiness guides" to expedite IT implementation; an
integrated healthcare IT infrastructure; research into ways to apply
modern management practices to healthcare; international electronic
exchanges of healthcare research and information; and an expansion
of incentives that reduce medical errors.
Initiative Principals Committee
Samuel J. Palmisano (Co-Chair), Chairman and CEO, IBM Corporation
G. Wayne Clough (Co-Chair), President, Georgia Institute of
Gerard J. Arpey, Chairman, CEO and President, AMR and American
Shirley Ann Jackson, President, Rensselaer Polytechnic Institute
Lee C. Bollinger, President, Columbia University
Vikram Pandit, President and COO, Morgan Stanley
Molly Corbett Broad, President, University of North Carolina
Steven S Reinemund, Chairman and CEO, PepsiCo, Inc.
Michael J. Burns, Chairman, President and CEO, Dana Corporation
W.J. Sanders III, Founder and Chairman Emeritus, AMD
Mary Sue Coleman, President, University of Michigan
Ivan G. Seidenberg, Chairman and CEO, Verizon
Denis A. Cortese, President and CEO, Mayo Clinic
Kevin W. Sharer, Chairman, CEO and President, Amgen, Inc.
Robert M. Gates, President, Texas A & M University
Charles M. Vest, President, Massachusetts Institute of Technology
Sheryl Handler, President and CEO, Ab Initio
G. Richard Wagoner, Jr., Chairman and CEO, General Motors Corporation
John L. Hennessy, President, Stanford University
Source: Innovate America: Thriving in a World of Challenge and
Contributed by Jenny Fisher, AGI/AAPG 2006 Spring Semester Intern
Please send any comments or requests for information to AGI
Government Affairs Program.
Posted February 3, 2006