“The first step in winning the future is encouraging American innovation,” asserted President Obama at his State of the Union address last month.
With the U.S. economy recovering at a snail’s pace, President Obama made encouraging American innovation and job creation a clear priority.
“Millions of private individuals, acting independently within the free market system, do it best,” he said. “We need to encourage and incentivise entrepreneurs, not tax and regulate them out of business.”
Obama’s innovation strategy intends to bring together the ingenuity of the American people and the resourcefulness of the private sector to ensure economic growth.
The strategy outlines three critical areas where government policies in conjunction with the private sector can lay the foundation for job-creating innovation and shared prosperity:
1. Investing in the Building Blocks of American Innovation. Ensuring that the economy is a breeding ground for successful innovation – from investments in research and development to the human, physical, and technological capital needed to perform that research and transfer those innovations – provides the necessary infrastucture to foster innovative advances.
2. Promote Competitive Markets that Spur Productive Entrepreneurship. Creating an environment that rewards entrepreneurship and early-stage investment allows U.S. companies to compete on the global exchange of ideas and innovation. Granting an income tax ‘holiday’ on capital gains realised from investments in early stage companies is a valuable first start in making this happen.
3. Catalyze Breakthroughs for National Priorities. There are certain sectors of exceptional national importance that need support and incentives from our government for economic viability. These include developing alternative energy sources, reducing costs and improving lives with health IT, and manufacturing advanced vehicles. In these industries, government can be part of the solution by incentivizing behaviour and encouraging focus on these challenges and the potential solutions.
In recent discussions I’ve had with individuals in the investor, entrepreneur, and government communities, it is the ubiquity of the Internet with its nearly 2 billion connections, the emergence of Web-based platforms that enable mass collaboration and crowd-sourcing, and the excess mental capacity of the world’s educated population (estimated to be in excess of 1 billion hours annually) that can drive the rapid creation and development of new, sustainable startups.
It is through disruptive companies and ideas that changes to the social paradigm occur – for instance Microsoft’s take on personal computing or Facebook’s advancements in social networking and communications. These emerging companies create new opportunities for America’s future generations.
How do we gain the foresight to encourage those yet-to-be discovered industries? Historically, the role of vetting new companies was the domain of venture capital firms who started at the grass roots level. They scoured the countryside, weighed and analysed business plans, and committed seed-level investments that helped companies get off of the ground. Unfortunately, not enough venture capital backed companies ever gained traction and scale to the point of sustainability.
We need to improve those odds in order to shore up the employment rates through support of innovation and entrepreneurship. Innovation is not an event, a box to be checked off, or something that merely “happens.” Innovation is the lynchpin for a new way of life. Real innovation – producing new, progressive and actionable ideas – requires a structured systematic approach.
Companies such as InnoCentive provide a framework for an emerging form of open and collaborative innovation. InnoCentive – reaching out to a global community of expert solvers who represent the world’s brightest minds – harnesses the collective Global Brain to solve problems that really matter, at a staggering 50% success rate.
On February 10, 2011, $1 million was awarded to an InnoCentive Solver – Dr. Seward Rutkove, a neurologist at Boston’s Beth Israel-Deaconess Medical centre – who identified an important biomarker for measuring disease progression in Lou Gehrig’s disease, or ALS. With no effective treatment or therapy for the disease, identification of the biomarker to measure disease progression is expected to dramatically accelerate drug development. This social web 2.0 approach to problem-solving brings together virtual micro-communities to develop plans and address specific challenges.
By embracing Open Innovation, the government as well as the private sector can collaborate with creative, thoughtful, and highly motivated people to quickly solve our most critical issues – winning the future through unprecedented innovation.
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