In a Dec. 5 article in the Wall Street Journal titled, “The economy’s hidden problem: We’re running out of big ideas,” Greg Ip wrote: “By all appearances, we’re living in a golden age of innovation.” He went on to say that R&D’s share of the national GDP is at an all-time high. There are more scientists and engineers here in the U.S. (and across the globe, actually) than ever before. And yet, this hasn’t translated into big advances in our standard of living.
The measure of “total factor productivity,” a comparative result of combining total capital expenditures and labor more creatively, captures the contribution of innovation. This number peaked at 3.4 percent in the 1950s primarily because of the advancement of technologies such as electricity, aviation and antibiotics. This factor has steadily slowed to its current average of 0.5 percent.
A messy process
Ip also finds that in general, the payoffs of R&D have declined dramatically in the U.S. To be fair, federal regulations in many industries like aeronautics (drones), finance (resulting from the last recession) and automobiles (electric and autonomous) have hindered new technology application. There have been some inroads at the federal level to allow for more experimentation with regulations to support new tech. However, the downside of R&D failures have lead to a conclusion best expressed by Joel Mokyr of Northwestern University who said innovation is “… a messy process inevitably with some negative bite-back. But I have this sense we have become more risk-averse. We are less willing to accept the fact that things can go wrong.”
There are roughly 300,000 researchers in the U.S. Worldwide, it is estimated there are more than 3 million scientists and engineers involved in research, development, and innovation in existing and new technologies. The odds are that with 10 times the number of researchers globally, someone somewhere is working on the next big thing or making incremental improvements in current big things.
Proctor & Gamble instituted its “Connect and Develop” methodology of scouting the entire globe for new technologies that it may be able to use to improve its existing products or add new ones. Considering its size, it has to create roughly $8 billion worth of new or line-extending products per year just to stay even with its stakeholders’ minimum expectations. The company says it is getting half its new products and ideas from people in countries outside the U.S.
If P&G is successfully looking all over the world for new products and technologies, can you afford not to do the same? Consider connecting to the U.S. Chamber of Commerce or your state and federal representatives to make connections to our consulates located in other countries to search out technologies and products that could benefit your company’s growth strategy. You may also find opportunities by hiring international students from your target countries who are looking to stay in the country after graduating from U.S. universities. Many have family and contacts back home who could be tapped to help accelerate your company’s growth.
As Entrepreneur-in-residence, John Myers is helping the University of Mount Union build out its entrepreneurship program, connecting with manufacturing companies to provide R&D and to establish a patent and IP commercialization policy as well as managing its incubator.