The Venture Edge

I love entrepreneurs who do big things, who want to change the world, who know that if they fail, they’ll fail big---but if they win, they will have made a difference.  I’ve written about Elon Musk (“SpaceX: A big win for an emerging industry”) who, with SpaceX and Tesla Motors, is definitely taking on monumental, but exciting challenges.  Today I want to tell you about a unique entrepreneur who also has a big vision that will giveyou faith that real innovation—the hard stuff—is alive and well.  

I never switched my allegiance to Apple, although I wouldn’t part with my iPad2 for anything. No, I’m one of those business people still rooted in PCs and Windows. But I have to say…the death of Steve Jobs yesterday was a huge loss to innovation. He was the first of the technology icons that I’ve admired to leave this world, so it felt a bit like a personal loss as well. I’m sure Apple will feel his absence for a long time to come. As difficult as it was for Tim Cook to replace Steve Jobs in the hearts and minds of Apple fans while he was alive, it has to be even more difficult trying to step into the shoes of a legend.

I was green with envy when I read Kathy's last post about her visit to the Kennedy Space Center to watch the final launch of  space shuttle Atlantis. As someone who can still clearly remember Apollo 11 astronaut Neil Armstrong make man's first footstep on the Moon, I am extremely proud of our nation's achievements in space. But while I agree that NASA (and the space agency's bevy of government contractors) has accomplished remarkable things, I strongly believe that the time has come for us to turn over the task of manned spaceflight to private industry.

DARPA -- the Defense Advanced Research Projects Agency -- is well known for its technology innovations. Founded in 1958 as America’s response to the Soviet Union’s launching of the Sputnik satellite, DARPA invented the Internet (no, it wasn't Al Gore), the stealth technology used in fighter aircraft, high-energy laser technology for space-based missile defense, and much, much more. DARPA’s mission is to maintain the technological superiority of the U.S. military and prevent technological surprise from harming our national security by sponsoring revolutionary, high-payoff research bridging the gap between fundamental discoveries and their military use.

Unfortunately, I believe Kathy was correct in her assessment a few days ago that innovation is moving out of the United States,. The first I recall hearing warnings about the coming Great American Brain Drain was in an article by David Gergen, published two years ago in U.S. News and World Report. In this article -- entitled Great to Good? -- Gergen reports that "In 1970, U.S. students represented 30 percent of all university enrollments worldwide; by 2000, that had dropped to just 14 percent. The U.S. share of Ph.D.'s around the world is also plummeting, from about 50 percent in the early 1970s to a projected level of 15 percent in 2010. By a separate estimate, within just five years, Asia will have produced 90 percent of the world's scientists. Never before has there been such an explosion in the world's knowledge workers." The bad news is that the vast majority of this explosion in the world's knowledge workers is occurring outside of our borders.

For years people have moaned and groaned about the outsourcing of U.S. manufacturing capability to other countries, namely countries where the cost of labor is substantially cheaper.  Whether or not outsourcing is a good thing is really a moot point because it's now a fact of life.  I'm afraid that it won't be too long before we say the same thing about innovation.  The fact is that an amazing number of corporate research laboratories are being opened in China.

I was recently discussing with a friend the difference between creativity and innovation, and how people tend to confuse and conflate the two. In business, while creativity -- coming up with new ideas and new ways of looking at the world -- is a nice thing to have in any organization, unless you are creating ideas that can be put to use (innovations), then it is of little real use. Innovations flow directly to the bottom line, while creativity tends to float somewhere high above.

New entrepreneurs often think that they don't have a chance if they enter a market that has some big-name players in it.  Really, would you want to go head-to-head with Microsoft or GE or Google?  Only if you have a death wish.  But there are ways to enter a market with major players and still be successful.  Why?  Because the big boys (also known as the "incumbents" in research lingo) have some serious things going against them.

While many in our nation bemoan the loss of manufacturing plants and capacity to lower-cost countries -- the losses of jobs and tax base are understandably traumatic to the affected communities and the people who live within them -- the United States is increasingly depending on innovation to lead the way. We are becoming a nation of knowledge workers -- farming out or outsourcing or licensing cutting-edge technologies to manufacturers overseas. It is important that instead of throwing government money after the rapidly disappearing manufacturing base, and instead to invest it wisely in innovation -- the seeds of our future.

There is a huge cultural change going on all around us--you would have to be in a coma not to see the evidence--and it has ramifications for innovation on a global scale that we don't yet understand.  I'm talking about the cultural shift to short-term thinking and instant gratification.  We see it in every facet of life, from short selling in the stock market, to investors opting out of really early-stage ventures because the time to exit is too long, to students leaving PhD programs in science and engineering for lucrative business jobs right out of college, to communication tools like Twitter.  We want what we want right now--we have no patience for long-term thinking.