If you work long enough, even in high growth businesses or organizations, the inevitable bump in the road comes along, and sometimes that bump is more like a pot-hole or a ditch. When the pie is getting smaller, no one is happy. This axiom applies equally to companies, institutions, governments and world economies, and the ultimate remedy is almost always the same as well. As painful as it may be, investing in innovation is what will get the pie growing again.
When a company is forced to shrink, employees worry about their jobs and the shrinking value of their stock options, bankers worry about being repaid, investors worry about the value of their stock or having to invest more capital to keep the enterprise afloat. The leaders of the company worry about retaining talent and maintaining morale within a sea of seemingly unending bad news.
A similar story results within institutional settings. When funding and other sources of revenue go down, employees get nervous, board members get aggressive in searching for cost reductions, donors become less enthusiastic, and leaders have a hard time generating enthusiasm for the mission.
Unfortunately, entire countries are susceptible to the same phenomenon. When times get bad and the pie starts shrinking, citizens get nervous about their jobs and their future, and all of life appears to be a "zero-sum" game. If someone else gets something, it must be coming from my pie. This totally understandable mentality results in rage over virtually any government spending, a conviction that immigrants are taking good jobs from citizens who need them, a reluctance to invest personally or through tax dollars, and romanticizing the past even if, by any objective standard, it can't be replicated.
When faced with a shrinking pie, all leaders are faced with a similar calculus: how to focus inadequate resources (when a pie is shrinking resources are always inadequate) to get the pie growing again. In a commercial setting this may mean closing less productive divisions, product lines and assets while at the same time investing in opportunities that will result in future growth. Institutions go through the same process as they seek to reinvent themselves during tough times. Governments have the most difficult time of it because in some sense every citizen is a shareholder or board member, and decisions are made by a majority vote. Change is never popular, and future investments cannot be completely evaluated until after they have been made, so the natural tendency is to avoid bold initiatives even when they are desperately needed.
The precise measures required to get the pie growing again are always subject to serious debate. Ultimately, the question is what targeted investments will spur the sustainable growth needed to refocus the company, institution or country on opportunity as opposed to fear.
Holden Thorp and I suggest in our new book launching today that research universities can and must be a source of innovation that gets the pie growing again. In Engines of Innovation--The Entrepreneurial University in the Twenty-First Century, we suggest that with $250 billion in endowment and a group of the most accomplished individuals on the planet, research universities have no choice but to gear up to attack the world's biggest problems and, in the process, provide a jump start to the process of getting the pie growing again. Our hope is the book will foster a national conversation on maximizing the impact of the work going on in our elite institutions of higher education. To that end we've also launched a website, Revupinnovation.com designed to pick up where the book leaves off. Have a look and let us know what you think.
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Economic history of the past 30 years or so tells us that every time the pie shrinks, so does the middle class (and lower) share of the pie. But when it gets bigger, all of the increase goes to the top income tiers, and the middle class share of the pie gets smaller still.
It's like the price of fuel at the pump. Prices go up instantly at the slightest rumor of turmoil in the oil market. Yet they drop at a snail's pace when the perceived crisis proves unfounded or is resolved.
The "free market" will milk any potential change to maximize the strength of Wall Street and to diminish the middle class.
If someone could accomplish that they deserve billions. Only 1% of the near-trillion in stimulus funds went to "innovation," but it was mostly politically connected institutions or companies. Prize money would pay for actual results - instead of (forgive me) "hope."
The Intro video about Renewing America will make you feel better about our future.
Nice to see 3 friends making great comments. Linda, your lowtech solutions ideas remind me of the folks who went to India and gave the poor solar cookers so they wouldn't have to scramble for scare fuel.
Truth Seeker, universities could almost pay for themselves if they wouldn't give away the research that taxpayers fund. It's nice to have entrepeneurs bring research to fruition but give some back to the school.
I fear that we have reduced physical innovation to that which it takes a PhD to accomplish. The mundane innovation that we may well need is not glorious enough, and the percentage of people who can financially and academically join that elite PhD class continues to shrink.
I hope that countless tradesmen who have had their futures wiped out by the horrendous over supply of new construction will get innovative in the mundane areas that academics ignore. I like the plumber who invented a dual flush retrofit. I admire the Germans who invented a cheap air conditioner that runs on solar thermal and uses no electricity. I want one. These would be scoffed at in some circles, but I expect them to win my dollars because they are potentially better investments than anything else I can do with the money. In contrast, academia risks pricing itself out of existence over the long term.
When I laud the Internet, I like to point out that it emerged essentially as a side effect of technically astute people merely trying to communicate effectively, and that is a beautiful example of the way innovation often works. However, I often try to suppress the queasy feeling that the Internet was at the root of our nation's undoing -- each job that could be done in the lower cost hinterlands, and each job that could be done from an energy efficient home office rather than expensive new brick and mortar requiring a horrifically expensive and inefficient transportation-intensive infrastructure was instead given to those in foreign economies, and thus began the perpetual drain of the nation's wealth.
I don't like to be seen as parochial. I don't want to be seen as a defender of U.S. consumerism and materialism, because it is not what is admirable about this nation. I do want, however, some recognition among academics and power brokers, that every nation and its people deserve a sustainable economic path that preserves sacred opportunity for all -- a tenet of our democracy -- and U.S. financial and business innovators have managed to destroy such a path that this nation had. Please help us fix it.
Certainly, though the dot com bust might lead us to conclude that the Internet was a dud, the fact remains that to this day it inspires innovation or at least good old-fashioned application engineering and money making. Surely that the Internet has had that net expander effect that you seem to appreciate, and I maintain that the reason is accessibility. As a nation, the U.S. still looks to health care / life sciences / bio engineering / medical research for the next big thing, and a lot of university research dollars have gone there, but I maintain that this is sadly misguided. The reason is that whatever emerges will never be broadly accessible. At the very best, even unemployed people will somehow be able to afford to live longer, for what, for a longer life of indignity? None of us will ever be setting up a genetics lab in our basement or tinkering with retro-viruses and cloned mice in the spare bedroom on weekends, so it can't save the economy. Press on.
I suggest instead of a war footing, a billion here a billion there to re-build another country we channel this nation, with out leaving it unprotected, into space. To start, using commercial not just Federal employment we build craft that can fly to the moon and land back here safely.
Now, as always we hear No, it is a waste of money and time! If you think that you are dooming this nation to a war footing to expand the markets and a slow fall into the poor house. I can envision ten million new jobs in five years. Can you suggest a better way to rebuild this nation? I have a dream plus ask not and I will put this nation back to work!