FW: [IP] Another Voice Warns of an Innovation Slowdown - NYTimes.com

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-----Original Message-----
From: David Farber [mailto:dave@farber.net]
Sent: Monday, September 01, 2008 5:25 AM
To: ip
Subject: [IP] Another Voice Warns of an Innovation Slowdown - NYTimes.com

http://www.nytimes.com/2008/09/01/technology/01estrin.html?_r=1&oref=slogin

September 1, 2008
Another Voice Warns of an Innovation Slowdown
By CLAIRE CAIN MILLER

MENLO PARK, Calif. - Judy Estrin, 53, has spent her entire career in 
Silicon Valley, a region that thrives on constant innovation. Ms. 
Estrin, the former chief technology officer of Cisco Systems, has 
founded four technology companies.

Yet she is deeply worried that Silicon Valley - and the United States 
as a whole - no longer foster the kind of innovation necessary to 
develop groundbreaking technologies and sustain economic growth.

"I am generally not an alarmist, but I have become more and more 
concerned about the state of our country and its innovation," she said 
last week, explaining why she wrote her book, "Closing the Innovation 
Gap," which arrives in bookstores Tuesday. "We have a national 
innovation deficit."

Ms. Estrin's book is the latest call to action during the last several 
years by scientists, technologists and political leaders worried about 
the country's future competitiveness in technology.

In 2005, the National Academies published "Rising Above the Gathering 
Storm," a report requested by Congress, which found that federal 
financing of research in the physical sciences was 45 percent less in 
2004 than in 1976 and that 93 percent of students in grades five 
through eight learn science from teachers who do not hold degrees or 
certifications in the topics. In 2007, the book "Innovation Nation" by 
John Kao, a business consultant, revived the debate.

And this year, both presidential candidates have made government 
support of innovation and technology a central part of their campaign 
platforms.

Still, not all technology watchers agree with Ms. Estrin about the 
extent of the innovation problem - or whether there is a problem at all.

"The whole innovation crisis thing is a bit overblown," said Paul 
Saffo, a technology forecaster. Innovation in the natural world, in 
the form of mutation, is lethal, so species do it only when they are 
under dire stress, he said. "What makes Silicon Valley unique is that 
this place has stumbled onto a way to sustain innovation even when the 
place is doing well," he said.

Ms. Estrin argues that short-term thinking and a reluctance to take 
risks are causing a noticeable lag in innovation. She cites a variety 
of contributing factors. A decline in federal and university financing 
for research has dried up new ideas, she said. When research does 
produce new technologies, entrepreneurs and the venture capitalists 
who back them have been too cautious to make big bets - especially 
after the costly failures of the dot-com bust. If start-up companies 
do find financing, she said, new regulations make it hard for them to 
grow, and the focus of investors on short-term performance discourages 
companies from taking risks.

Ms. Estrin's suggestions for bolstering innovation range from the 
vague, like advising venture capitalists and entrepreneurs to take 
more risks, to the specific, like mandating that schools pay teachers 
higher salaries.

Some of her prescriptions are unlikely to become reality, like her 
idea for a new government body modeled after the Federal Reserve that 
sets science policy without Congressional input.

Some thinkers on innovation agree with Ms. Estrin's assessment. "There 
is a remarkable telescoping in of vision and an unwillingness to make 
long-term bets," said Vinton G. Cerf, the chief Internet evangelist at 
Google.

Mr. Cerf led the development of the networking protocols that form the 
basic architecture of the Internet, a project to which Ms. Estrin 
contributed as a graduate student. He points to the Internet as an 
example of the need for long-term research and financing, since 
development of the technology used to transmit data online required 
two decades of government support.

Robert Compton, a venture capitalist and entrepreneur, said that the 
United States is losing its innovation edge to China and India. 
Chinese and Indian children are required to take more science courses 
than students in the United States, said Mr. Compton, who recently 
produced a documentary comparing high school education in the three 
countries. Of college graduates, 30 percent to 45 percent in India and 
China have engineering degrees, compared with 5 percent in the United 
States. Venture financing and patent applications are falling in 
Europe and the United States and rising in China and India, he said.

Most alarming to Mr. Compton is that 60 percent of engineering 
doctorates from American universities are granted to foreign 
nationals, but they are no longer staying here to work. "The American 
economy is not as exciting as China and India, and a lot of them are 
going back home," he said.

Ms. Estrin and others acknowledge that the recent surge in financing 
for alternative energy companies is a sign that innovation is alive 
and well in some sectors. Still, she is concerned that investors will 
not have the patience to build these companies.

"If they treat these companies the same way they treated others - a 
couple years in, they need to see returns or cut the burn rate or 
start cutting people - they are not going to get to where we need to 
go," she said.

Some who track innovation in the United States say the alarm bells are 
unnecessary and sound like a repeat of similar fears in past decades 
that turned out to be unfounded.

A June study from the RAND Corporation found that 40 percent of the 
world's spending on scientific research and development comes from the 
United States. The country employs 70 percent of the world's Nobel 
Prize winners and is home to 75 percent of the top 40 universities.

"The United States is still the world leader in science and 
technology," said the study's co-author, James Hosek.

But Ms. Estrin said that the technologies at the root of new products 
like Apple's iPod or the Facebook social networking service were 
actually developed several decades ago. If a new round of fundamental 
innovation isn't seeded now, the country will suffer in the next decade.

She compared the situation to a tree that appears to be growing well, 
but whose roots are rotting underground.

"Too much of it is short-term, incremental innovation, and the roots 
of the tree aren't happy," she said.

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