Why Innovation Matters

As we all know, America has no shortage of foreign and domestic challenges. But I am convinced that nothing is more important for the long-term strength of our nation than driving greater levels of innovation across and between all sectors of our economy—for-profit, nonprofit, and public.

In the early 1990s, a seasoned executive shared a metaphor that has stayed with me ever since. He said that innovation is like a coral reef. Marine biologists don’t understand fully what causes reefs to form, he said, but we do know that human actions can nurture (or harm) the process. The same is true for innovation. Innovation is a natural, chaotic, unpredictable process that is hard, perhaps even impossible, for well-meaning outsiders to foster. If we try to control or micromanage innovation, we risk squeezing out the very life forces that give rise to successful new ideas. Instead we must focus on finding ways to nurture and accelerate the natural processes of innovation once they’ve begun organically.

For almost a half century, Silicon Valley has been the country’s most compelling example of a healthy innovation ecosystem. Yes, first the dot.com implosion and now the Great Recession have dampened the exuberant spirits in the Valley—and the exotic Italian sports cars in the parking lots of Sand Hill Road now seem jarringly out of keeping with the somber reality of our times. But even after the deluge, Silicon Valley is the kind of reef ecosystem we need to support and nurture across our nation.

Over many decades, Silicon Valley developed a unique, creative, informal, hierarchy-leveling culture. It developed an interconnected web of talented engineers, risk-taking entrepreneurs, big-think investors, and service providers that inherently understood the Valley’s culture. It became the world’s most fertile breeding ground for innovative technology businesses—starting with HP, then Intel, and then other successes like Apple, Cisco, eBay, Google. This ecosystem is now nurturing a disproportionate share of promising tech startups like Tesla and Facebook that have great potential to transform markets.

Academia, government, and the nonprofit community have also played a big part in the success of Silicon Valley. Stanford University, the alma mater of many of the Valley’s most prominent leaders, played an enormously catalytic role following World War II and continues to do so in the commercial and social arenas. Today, for example, Stanford engineering students and graduates are at the forefront of efforts to create inexpensive, culturally appropriate technologies for helping people in the developing world meet their basic needs.

The federal government, which rarely gets credit for its catalytic role in any field, provided critical infusions of innovation capital through the Department of Defense, the Department of Energy, and NASA. The Valley’s successful entrepreneurs—such as Hewlett, Packard, Jeff Skoll, Pierre Omidyar, Sergey Brin, and Larry Page—often start charitable foundations and other ventures to support innovators (nonprofit and for-profit alike) working to address the world’s hardest social and environmental challenges. Today, Silicon Valley and the Bay Area as a whole are every bit as much of an epicenter of social innovation as they are of commercial innovation.

It is critically important to point out that there has never been a defined, structured way to connect the dots in the Valley. Instead, it has been this organic ecosystem—with its interrelated professional and personal networks—that has allowed the “dots” to connect themselves. A good example of this phenomenon is the remarkable TED conference, which brings together the brightest minds in a wide range of fields to advance its mission of “spreading ideas.”

Of course, Silicon Valley is not the only ecosystem of commercial and social innovation in America. However, most regions, and the nation as a whole, default to linear thinking with formal structures to define and control innovation. What they need instead is to turn the forces of innovation loose—to create the right conditions for that reef ecosystem to grow on its own and take hold.

I have come to believe that nurturing innovation at the national level will require both top-down and bottom-up strategies.

First, our nation needs an overarching framework—perhaps it could be called a “national innovation strategy”—that would define a shared vision, create a clear direction, and identify priority areas for innovation. This national innovation strategy could be drafted by a Presidential Commission made up of A++ innovators and thinkers from across a host of relevant disciplines (and outside the political process), and then quarterbacked by a high-profile Innovation Czar appointed by the President.

The priorities might naturally start with the three top priorities the President spelled out in his address to the joint session of Congress in January: “harnessing the power of clean, renewable energy,” “addressing the crushing cost of health care,” and “expand[ing] the promise of education in America.” It should also embrace other needs, such as the enormous challenge of rebuilding our infrastructure and developing more robust emergency response and homeland security.

Take something as simple as the rebuilding of our highways, bridges, and rail systems. In spite of the infusion of stimulus dollars, our approach to infrastructure is, for the most part, no different from how we’ve done things for decades. Where are the breakthroughs, the new materials, the embedded communications, smart transportation systems, and digital sensors for safety and maintenance that would give us smarter, better, longer-lasting transportation systems?

The national strategy would have to identify, to the fullest extent possible, the specific inflection points and/or tipping points within each of the priority areas—that is, opportunities where targeted innovation could have a disproportionate impact. This would be an even grander version of what the Bill & Melinda Gates Foundation has done in the field of global health with its $100M Grand Challenges initiative.

Simultaneously, we will need bottom-up approaches to engage tens of millions of Americans and nurture reefs in every part of our country and society. For example, building on the “stock exchange” approach used by innovative companies and outlined in this New York Times article, the Administration could create a Federal Innovation Stock Exchange and open it to any federal employee who wanted to float an out-of-the-box idea for addressing a tough societal challenge or creating new innovations that add to our economic engine.

All of the ideas listed on the “stock exchange” would be available for all to see on the Web—sparking additional ideas from inside and outside the federal government. All federal employees whose innovations were adopted would receive some form of bonus and some form of recognition from the President. And if this works for the federal government, one could imagine a network of innovation stock exchanges in which states, metropolitan regions, large universities, hospitals, and civic-minded corporations put in place similar mechanisms to advance innovation to address key social and economic needs.

With a national strategy combined with efforts to seed the creative chaos from bottom up, the Obama Administration could put America on the right path for the long term. Helping to unleash, channel, and connect the millions of innovative minds across all regions, all disciplines, and all walks of life is the most important form of long-term stimulus the President can provide.

Mario Morino, a former software entrepreneur, is the chairman of Venture Philanthropy Partners, based in Washington, DC.

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