Online Extra: Industry And Academia Weigh In (extended)

IBM's Sam Palmisano and Georgia Tech's Wayne Clough talk about their National Innovation Initiative, due out in December

In December, the Council on Competitiveness -- an organization of CEOs, university presidents, and labor leaders -- will release the recommendations from its yearlong National Innovation Initiative. The report seeks to identify key steps the U.S. should take to keep its leading role as an innovator in the global economy.

BusinessWeek's Michael Mandel and Steve Hamm recently spoke with the initiative's co-chairs: Samuel J. Palmisano, CEO of IBM (IBM ), and G. Wayne Clough, president of Georgia Institute of Technology. Following are edited excerpts from the discussion. (Note: This is an extended, online-only version of the interview that appears in the Oct. 11, 2004, issue of BusinessWeek.)

Q: When you were starting this, what was your biggest fear about what could go wrong in terms of the U.S. innovation machine?


We began to see that the world has changed so dramatically. We'd gotten complacent about our place in the world economy, and if we didn't do something we were going to get caught.

We've added basically 3 billion people to the pool of the global economy who weren't there 10 years ago. And that's quite an unusual circumstance when you talk about India and China coming into the economy.

These folks are potent competitors, and we should respect what they bring to the table. For those of us in the technical side of the world in education, you can see that India and China are investing heavily in their education system. They are graduating today more engineers in many areas than the U.S. is.

The U.S. investment in our workforce is pretty much static. If anything, we've lost some traction because we're not bringing as many talented international students today.

We think we still have the high ground, and the question is, how do we keep it in a time when clearly the ground rules of the competition are changing? It's O.K. for those ground rules to change. We have to be adaptable enough to win the competition.

Q: Where are the opportunities? What's going to drive the next stage of economic expansion?


The future breakthroughs are going to be in interdisciplinary cooperation -- combinations of biology, chemistry, and computational science.

Roughly 100 million jobs are going to be created in a lot of these cross-disciplinary fields: bioinformatics, hydrogen fuel cells, broadband infrastructure, on and on.

Of course, they're not all going to be in the U.S., but I think the challenge is, how does the U.S. compete for those jobs?

They're going to get created. There's this big void that needs to be filled. Someone will fill it. So the question is: Can we go get our fair share?

Clough: That's not just a situation where we are bemoaning our fate. When you look at biotechnology, information technology, nanotechnology, we are at a tipping point in terms of the opportunities new technology will provide us.

Q: There are some areas of research and development where the U.S. is weaker than it should be.


With the Cold War going away, some of the motivations for research and development funding shifted dramatically. In the process of that, people were not thinking very clearly about the mix.

We know there's a problem. You've got to get Energy Dept. support up. You've got to get the Defense Dept. back in the basic research game, and you've got to get some more funding to the National Science Foundation.

And you need to create a [new] National Defense Education Act, which will fund scholarships and fellowships for American students to go to graduate school.

Q: How can the U.S. make sure that it has the skilled workforce it need?


We just can't say government should do more. Clearly, government is a major component of all these things. But the private corporations have to step up, the academic university has to, we all have to step up in this dimension. Everybody has to participate in trying to solve this problem.

A lot of what companies do -- and we happen to be an example of it -- is try to get more and more diverse groups interested in technical fields. We understand that if you just look at the pipeline, we can't fill the number of jobs we need strictly with the majority groups.

So we're trying to get younger people earlier on in their lives excited about technology. There are multiple forms of engineering disciplines, so we're not trying to steer them into computer science or a program that they might find uninteresting.

We'll actually have them assemble a PC or something, or have them do some video-game graphics, do something they would get excited about, and say, gosh, I really like that.

Clough: We created a major called human/computer interaction. And what does that do? It draws in a lot of women and minorities -- which computer science doesn't.

Q: People will nod their heads and say, "Yes, innovation is important." But when you ask them to ante up, they'll say, "We don't do that."


I'd like to see companies that benefit from technological research but don't do a lot of research themselves put something back in, because they're benefiting tremendously from the investment made by lots of other people.

I'm not saying necessarily funding a research project, but put something back into the system in some way to help us address workforce issues, those kinds of things. Make contributions to universities, K-12 [education]. Get involved.

Q: Innovation thrives on openness, which seems to be more difficult today.


We're going to really try to articulate the importance of global interaction. We don't think any country, and the U.S. being the most advanced, can now build up walls like we're some big castle.

Quite honestly, we've learned at IBM that we get much better output, or quality of innovation, by having these global interactions.

In the past, we would have put them in a building, but in today's world with broadband capability, it's not necessary that you have them all housed in the same facility.

Clough: From the university side, part of our problem right now is the visa situation. We've seen a decline of 30% of applications in students coming from international domains to this country. And guess what? They've gone to Europe. And so what we've done is we've reinforced our competition. We've built some walls. We've got to rethink those.

Q: The report is supposed to come out in mid-December?


One of the reasons we're choosing December was you're going to have an Administration in transition, even if it's the existing Administration. We have heard from both campaigns that they want advice on this.

Palmisano: We really think that our work begins after the report is published in December. We're going to have to go out and push, lobby, educate, articulate, persuade, nudge -- all the things you have to do to make this thing a reality.

Now at the same time, I do think quite honestly, we're going to get some help because the rest of the world is not just sitting idly by. There's nothing better than competition in the U.S. We are a very competitive society. We like it.

We're not naive enough to say we're going to set a public-policy agenda, but we're hoping we can influence it so that we can begin to go after these 100 million jobs.

Clough: I don't think our recommendations are going to solve all the problems. There's no panacea here. We're in a time of transition, and it's an exciting time. And the rise of new technologies is going to drive it even faster.

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