Archive for February 2010

The Industrial Commons – part 2

February 2, 2010

In the last blog, I reviewed the concept of the Industrial Commons which was introduced by Gary Pisano and Willy Shih.  In their July-August 2009 article on “Restoring American Competitiveness” they suggested some key action steps for government and business to protect and regain our edge in high-tech manufacturing and innovation.

What Government Must Do

  • Reverse the slide in the funding of basic and applied science.  Basic scientific research is about deepening our understanding of first principles, and applied research seeks to extend that knowledge to answer specific questions about real-world programs.  Commercialization takes applied research into the market.  They argue that government has been particular weak in funding applied research.
  • Focus resources on solving “grand challenge problems” like climate change, breaking the dependence on hydrocarbons for energy, and addressing the ravages of diseases.
  • Let ailing giants die (e.g. allowing the bankruptcy of GM and Chrysler).  Pisano and Shih opposed the automotive bailout.

What Businesses Must Do

  • Make capabilities the main pillar of your strategy. The authors chide companies for putting ‘brand development’ over innovation and enhancing the capabilities of their goods and services.  Apple, Intel, Corning, Amazon, and Applied Materials received pats on the back for their investments in building new capabilities.
  • Stop blaming Wall Street for short-term behavior.  They say that companies need to think long-term and not back off.  “When they (companies) articulate a credible long-term strategy and demonstrate a capacity to execute that strategy, the capital markets have given them the necessary room to achieve it.”
  • Recognize the limits of financial tools.  The authors argue that some of the quantitative techniques in corporate America make short-term investments look more attractive than long-term investments.  They say that these analytic tools are hurting the long-term prospects for innovation.
  • Reinvigorate basic and applied research.  Pisano points out that a few companies like IBM and Corning have maintained strong corporate research capabilities and look to them for the next wave of innovation.  Other companies have allowed their corporate research infrastructure to wither.
  • Collaborate. Pisano points to IBM’s approach of “radical collaboration“ in which it and a set of commerce partners share research capabilities and a common manufacturing platform.
  • Create technology-savvy boards of directors.  Basically, boards of directors need to include techno-geeks, not just finance and marketing experts.

How does this relate to the U.S. Talent Supply?

Now, I didn’t really intend to spend a lot of time talking about government and corporate policies related to R&D investments, bailouts, and Return-on-Investment analysis.  But those of us in education and workforce leadership need a deeper understanding and appreciation for all the factors that affect the innovation eco-system.  In fact, U.S. strength in these other eco-systems factors are why we have maintained our strong competitive position for so long, in spite of our education shortcomings.  So, let’s start honing in on a major factor in the innovation eco-system, America’s talent supply.

First, take a look at some big picture ideas communicated in “Rising Above the Gathering Storm” published in 2007 by the National Academies of Sciences and Engineering, and the Institute of Medicine.  An expert panel was formed at the request of Congress, specifically to provide suggested federal policy actions that could help buttress American competitiveness in the face of intensive global competition. It’s an important report and can be found at the National Academies Press website.  http://www.nap.edu/catalog.php?record_id=11463

The panel spoke about the heart of American competitiveness this way, “Because other nations have, and probably will continue to have, the competitive advantage of a low wage structure, the United States must compete by optimizing its knowledge-based resources, particularly in science and technology, and by sustaining the most fertile environment for new and revitalized industries and the well-paying jobs they bring.”

Ultimately, we can’t build and protect our Industrial Commons without a steady supply of highly-skilled talent – both at the research, design and technician levels.  We need a new workforce that is literate in technology and engineering (design) and able to apply mathematical reasoning and scientific knowledge to solving problems and creating new goods, services and processes.  This is what I think of when I use the term STEM (science, technology, engineering and mathematics).   The National Academy issued a stern warning about what happens if we fall short of sustaining our innovation eco-system and creating the right talent supply:

Without high-quality, knowledge-intensive jobs and the innovative enterprises that lead to discovery and new technology, our economy will suffer and our people will face a lower standard of living.”

Well said.  We need to keep saying it.  And we need to take the right actions – from the Halls of Congress, to the local school board meeting room, to the local Chamber of Commerce education and workforce committee, that will respond appropriately to this warning.

Next – why I’m finally getting on the STEM bandwagon.

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