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Innovation Policies for the 21st Century: Report of a Symposium Luncheon Address in the Great Hall Moderator: William J. Spencer SEMATECH, retired Dr. Spencer, expressing his honor at introducing Dr. John Marburger, pointed out that the latter’s current tenure as science adviser to the President and director of the Office of Science and Technology Policy (OSTP) coincides with “an exciting time for science in the United States.” Moving selectively through the details of Dr. Marburger’s extremely distinguished career, a printed summary of which was available to the audience, Dr. Spencer represented him as an exemplar of a generation that grew up believing it was physics that underlay all science. After earning a master’s degree at Princeton and a Ph.D. at Stanford—“two of the better physics departments in the country,” Dr. Spencer pointed out—Dr. Marburger distinguished himself as a scientist in the field of nonlinear optics. But what gained Dr. Marburger the most recognition, even before his elevation to his current position, was his leadership in the field of science. He had served as chairman of the Department of Physics at the University of Southern California, then as president of the State University of New York at Stony Brook. When, in 1998, Dr. Marburger moved into the post of director at Brookhaven National Laboratory (BNL), Dr. Spencer was a member of BNL’s board of directors; he therefore knew first-hand “what a mess” the laboratory was in at the moment Dr. Marburger took it over. As Dr. Marburger had consented to take questions following his address, Dr. Spencer decided, in the interest of time, to turn the podium over to him without further ado.
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Innovation Policies for the 21st Century: Report of a Symposium LUNCHEON ADDRESS John H. Marburger White House Office of Science and Technology Policy Registering his appreciation at having been invited to address the symposium, Dr. Marburger said that its agenda struck him as strongly similar in theme to that of a conference he had addressed a month before: “Innovation as a Competitive Advantage: Role of the Research Park,” sponsored by the Association of University Research Parks (AURP). He decided, therefore, to present substantially the same remarks as on that previous occasion. Research parks became a global phenomenon and, in the future, are likely to be significant focal points for all countries with knowledge-based economies. In 2002, the AURP identified and sought data from about 200 research parks associated with universities in the United States. Those that responded, about half of the 200, had a total of more than 2,900 tenants employing over 235,000 individuals; the dominant or leading technology was, in most cases, biomedical or medical technology. Not-for-profits made up 83 percent of those responding, while 62 percent had a business-incubator component and about one-third had a yearly operating budget exceeding $1 million. Seventy percent had been established using public funds, mostly during the 1980s and 1990s. Dr. Marburger acknowledged that these data were a few years old, but opined that they were not of a sort susceptible to rapid change. The statistical portrait emerging from them matched the characteristics of the technology park and incubator programs that he started at Stony Brook in the 1980s and early 1990s, when he was the institution’s president. His remarks, therefore, would be based on direct experience with the development of such parks. Throughout his career, Dr. Marburger said, he had asked himself: What is the best strategic path to successful technology-based economic development? Although he did not give so much thought to this question while he was busy solving problems of quantum electrodynamics as a graduate student in the early 1960s, it was nonetheless in the air. Everyone at Stanford in those days was aware of the Stanford Research Institute, soon to become SRI and SRI International; of the rise of nearby Silicon Valley, which was just coming together; and of how the university had planned to foster high-tech industry even before World War II, an idea finally being carried through. “For those of us who worked in the Stanford environment, even if only briefly,” he recalled, “the power of linkages between a major research university and regional business was immediately obvious.” Another university-based coalition had emerged in North Carolina just a few years earlier to take advantage of the intellectual assets of Duke University, North Carolina State, and the University of North Carolina at Chapel Hill. It had an institute, RTI, which was similar to SRI. Also like Silicon Valley, the Research Triangle initiative had originated in academia and quickly engaged regional business leaders.
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Innovation Policies for the 21st Century: Report of a Symposium In these two examples of partnerships between universities and business, the federal government had been an important silent partner. The expansion of engineering and science departments during World War II, along with rapid increase in federal funding for university research in the decades thereafter, had created centers of excellence in basic and applied research throughout the country. State and local governments were making important investments in higher education—particularly conspicuous were those of California and New York, which were building new campuses—and 2-year community colleges were springing up everywhere. The recruitment of an increasing percentage of high-school graduates into new post-secondary programs, above all those of the 2-year colleges, was taking place. Governments helped build an infrastructure in which the new partnerships could succeed. “My colleagues on the President’s Council of Advisors on Science and Technology [PCAST] during this administration refer to this whole phenomenon as ‘the ecology of innovation,’” Dr. Marburger said, explaining that the term suggested “the notion of a ‘system’ in the innovation process.” This has been a subject of much study; in fact, he reckoned that many attending the symposium have looked at economic development occurring around the nucleus of a research university or federal laboratory, where this development has been fostered by the investment of public funds at the federal and state levels. Five categories embracing institutional participants in innovation systems were identified in a study prepared for PCAST, which Dr. Marburger cochaired with the prominent Silicon Valley venture capitalist Floyd Kvamme, by the Science and Technology Policy Institute (STPI), an organization attached to OSTP and operated by the Institute for Defense Analyses: governments, which play a key role in setting broad policy directions and a primary role in funding basic scientific research; private enterprises and their research institutes, which contribute to development and other activities that are closer to the market than governments are; universities and related institutions that provide key knowledge and skills; bridging institutions acting as intermediaries under such names as “technology center,” “technology brokers,” or “business innovation centers,” which play an important if understated role in closing the gaps among the other actors and had been important to the success of all types of research centers; and other organizations, public and private, such as venture capital firms, federal laboratories, and training organizations. The STPI study also identified four contextual factors sufficiently important to the operation of innovation systems to be able to make or break them: market conditions, physical infrastructure, education and training, and regulatory conditions. The innovation-systems approach looked at by PCAST the previous year identified barriers to specific policy objectives and assigned functions to mitigate
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Innovation Policies for the 21st Century: Report of a Symposium them for each of the five categories of actors. The process, as Dr. Marburger summarized it, was one of sorting through the challenges, deciding which actors should address them, and systematically improving the environment so as to promote the success of research centers. As an example, he offered the policy objective of building an innovation culture where none had existed; this might be addressed by removing regulatory or legal barriers, which is a government function, and providing incentives for venture-capital funding, which government and private enterprise can do together. Enhancing technology diffusion among the actors, then promoting extension and technical-assistance programs, is a role of government and bridging organizations, while government also can promote lifelong learning with the help of universities and private enterprises. Taking a systems approach that identifies the actors by functional categories in this way and working systematically through issues in the contextual factors that might be inhibiting the development of these centers turns out, Dr. Marburger said, to be an effective strategy. “Government can play a role in most strategies,” he added, “but it is not the only actor, and generally government action is most effective when it responds to needs identified by actors that are closer to the market.” Returning to the subject of his early exposure to regional development, Dr. Marburger recounted that, upon finishing his graduate study at Stanford, he started his research career at the University of Southern California. There, too, he saw first-hand how the engineering and business schools, strongly committed to regional industry, were leveraging federal funding to build programs that supported regional development. While there, he himself started a center for laser study with federal and industrial cosponsors that 30 years later was still thriving. He took these lessons with him when he went in 1980 to Stony Brook, where his first task as president was to open a 540-bed tertiary-care university hospital. In the process of “learn[ing] a lot more than [he had] ever wanted to know about the hospital business,” he saw an opportunity to leverage the resources that the state of New York was willing to invest—in both the hospital and expansion of the university’s medical school—to build up bioscience research, health care, and regional industry all at one time. Long Island, where Stony Brook is located, had multiple assets for developing biotechnology at that time. The director of Cold Spring Harbor Laboratory, the Nobel Laureate James Watson, was concerned about his scientific staff leaving the region to start biotech businesses in California and elsewhere. Nearby Brookhaven National Laboratory also had important resources for biomedical research although it was almost totally disconnected from regional industry. And the university was about to expand its medical faculty dramatically, not only in the clinical departments but in the basic medical sciences as well. Running through the highlights of what he said was a long story, Dr. Marburger related that Stony Brook established a degree program in genetics with Cold
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Innovation Policies for the 21st Century: Report of a Symposium Spring Harbor lab and placed one of its new hospital’s three linear accelerators for cancer therapy at Brookhaven. The university’s dean of medicine became a member of the same BNL board of directors on which Dr. Spencer was serving. The three institutions began joint recruitment with the aim of building complementary competencies. And Stony Brook emerged from a New York state competition set up to fund centers for advanced technologies with an award for one specializing in medical biotechnology. At the same time, the university began building acceptance among its faculty for participating with industry in cooperative research programs. “There was a lot of controversy at the time about whether engaging in industrial-related research would somehow undermine the quality of academic programs or the purity of the research,” Dr. Marburger recalled, adding: “You don’t need the entire faculty to have an attitude that’s favorable to development, but you do need a critical mass.” These and related activities strengthened Stony Brook’s applications to the state economic development agency for low-cost financing and grants to build a biotechnology incubator facility next to the hospital, which became a huge success. High occupancy rates right from the beginning made it possible to maintain an aggressive business plan for the incubator and led to several rounds of expansion that eventually included the construction of a generic pilot manufacturing facility for biotechnology tenants. The university also developed a small technology-transfer office that worked quite well, probably because its director, a former small businessman, had had direct experience with the commercialization of technology. He spent his days walking around to the labs, knocking on their doors, and asking people what they were doing. “If it sounded interesting to him,” recalled Dr. Marburger, “he took out the papers for patent disclosure and said, ‘Here, I’ll help you.’ And if it didn’t sound interesting, he said, ‘Well, it’s yours, do with it what you want.’ ” His activities led to an exceptionally high rate of licensing per patent disclosure. The director of the technology-transfer office was associated with a person outside who spent his time shopping around a list of university intellectual property to customers throughout the world. The two helped Stony Brook develop a very strong and successful business in the wake of the 1980 passage of the Bayh-Dole Act that had remained a source of revenue for the university and of satisfaction to many on the faculty, who had in the meantime become much more comfortable in their engagement with industry. But in recognition of their success, both the director and his colleague were promoted into other positions, with the result that the university’s technology-transfer operation “got bigger, and much less efficient and effective,” Dr. Marburger said. “It is still functioning today, but it never quite functioned as well as when we had only two people and a secretary.” All these activities established links between the university, regional business, and government economic-development agencies. Coordination among the
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Innovation Policies for the 21st Century: Report of a Symposium major research institutions allowed them to build complementary strengths and present a broader interface to the business community. The creation of critical masses of talent in related fields served to raise mutual awareness of opportunities and to reinforce the directions that the institutions had already established in their long-range plans. Looking back on these experiences, Dr. Marburger isolated five principles that he viewed as key to success: Build competencies with attention to regional strengths. This is important for a large country like the United States, whose markets display very strong regional differences but each of whose regions has its strengths and its possibilities. Institutions cooperating in regional development must hire people whose interests enhance and complement what is already found in the environment, which “doesn’t happen unless somebody pays attention to it.” For the idea is to build regional strength, not just institutional strength. When several research institutions are located in the same region, they benefit by cooperating in recruitment and group development. Stony Brook, Cold Spring Harbor lab, and Brookhaven National Lab shared information on an informal basis about areas of concentration and often collaborated on recruitment. Identify a research strategy. Stony Brook’s conscious decision to make biomedical research a priority meant allocating university resources to proposals and projects that worked together to build a foundation for future successes—even if, “in terms of some sort of absolute measure of quality,” these were at times not the best proposals to come forward. While there were exceptions to this practice, a bias was maintained in favor of those fields that could be expected to help further the overall strategy. “That requires leadership,” Dr. Marburger declared. “It does not happen in a university environment unless someone is willing to push on it.” Faculty development and capital improvements were coordinated to enhance biotechnology capabilities. While other areas needed and deserved attention, the immediate opportunities for funding lay in the biosciences, which therefore received the focus. Build a regional environment. In the early 1980s, Long Island business organizations were not aware of the rapidly growing opportunities in the biotechnology industry. They did not appreciate the significance of an emerging major tertiary health-care facility or the value of federal funding as a source of technology. The Long Island economy was then dominated by large aerospace contractors—principally, Grumman Corporation—that were to fall by the wayside as the cold war came to an end and industry shifted completely. “So it was important for me and my counterparts at the two laboratories to get together, pound the pavement, and talk to people—to take the biotechnology message to business groups, chambers of commerce, and state and local government agencies,” Dr. Marburger recalls. “The whole region had to cooperate in making this work, and somebody always has to take the first step to get others together.” Because Long Island’s
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Innovation Policies for the 21st Century: Report of a Symposium business community was aware of the dangers of relying on a single industry, these efforts by the leading centers of research to work together with business were warmly received. Form regional partnerships. Institutional rivalries are counterproductive; cooperation and collaboration are essential for regional-scale development; and regional-scale development is important for a stable pattern of growth. That companies start up, grow, then frequently either die or move elsewhere is not necessarily the end of the world, but it does necessitate continual start-ups. Some of the new companies may survive and add permanently to the economy, some may have to be replaced with others that are sufficiently similar to stabilize the workforce. It is because regional partnerships enhance mobility and multiply opportunities for workers and for businesses that a critical mass of mutually compatible businesses is needed to stabilize the inevitable effect of start-ups’ moving away. “In Silicon Valley in its heyday, and it is presumably still somewhat like this, you had the phenomenon of frequent moves of technical personnel from one company to another,” Dr. Marburger observed. “There was a great deal of mobility—companies came and went, started and failed—and in general the makeup of the workforce was similar, which stabilized employment in the area despite the dynamics in the companies.” Fund the machinery, which consists of facilities, people, and organizations. None of this happens without people who know that their job is to make it happen; neither regional development nor technology transfer can be made to work with volunteers. “I travel around the country looking for regions that are succeeding,” Dr. Marburger said, “and many are attempting to do it on a voluntary basis, but only those where there is some sort of executive center with a paid workforce [are having success].” In other words, whether at a state, county, or local-government economic-development office, or at an organization that is either freestanding or associated with a university or a business group, someone has to know that technology transfer is his or her job. Technology-related economic development usually entails investing state- and local-government funds in facilities to reduce costs for start-up tenants. Also needed are people to bring entrepreneurs together with financial and technical support. More than brokers, these individuals play the role of teacher and counselor for entrepreneurs who know the technology but are not familiar with business practices, and for investors who are not familiar with engineering and scientific mindset. Dr. Marburger acknowledged that these lessons may be learned in other contexts and may not apply to every situation. He and his Long Island counterparts tried to learn from other regions as theirs grew, and they discovered national organizations that help to foster best practices. The movement that supports university-based research parks, and of research parks that are based around a nucleating asset other than a university, was growing, thriving, and becoming an important part of the U.S. innovation ecology.
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Innovation Policies for the 21st Century: Report of a Symposium Dr. Marburger reiterated in closing that his observations were based on his own experience in addition to his knowledge of other research parks in the United States and around the world. He added that over the previous 5 years, he has visited over a dozen research parks in South Korea, Japan, Russia, and Europe. While “impressed with the similarities among the regions,” he noted that research parks abroad have a “much stronger government component” than is found in the United States. However, he said that he perceived the sheer diversity of such enterprises found in the United States, implying both experimentation and potential adaptability of research parks to new realities and opportunities, to be a source of strength. DISCUSSION Dr. Spencer, thanking Dr. Marburger for his comments and concurring that some leadership is required to set a research strategy, asked him to provide guidelines for doing so, particularly in an environment where researchers are unused to working in accordance with a strategy, such as that of a university or national laboratory. Dr. Marburger answered that among the first things to be done is to gather data. He had seen groups, whether they were made up of faculty or of university presidents, get together and have a great idea but make the mistake of not having “a look around” to explore possibilities. They may then see their efforts to sell their project meet with disappointment because it does not seem to fit with anybody else’s plans, whereupon they may either attempt to implement it alone or get a federal grant that in the end builds up a lab or center within the university that grows no roots in the community. Some states, as they undertake their own economic-development plans, have contracted with research organizations such as Battelle to make surveys of the capabilities found in their regions, and have then based their economic-development plans on the resulting data. The state of New York has very consciously selected, based on actual studies of capacity resident in the state, a set of objectives for fields of research and has promulgated it through its economic-development operation. Consensus building—which starts with procuring regional support and extends to creating an environment of acceptance for moving in a certain area—is never easy. But starting with an idea that doesn’t fit and then trying to force it is also very difficult. “You have to take advantage of opportunities,” Dr. Marburger commented, “and this doesn’t align very well with the values that you often find in research universities.” When looking for a faculty member, a research university very often simply looks for the best person available even if his or her field doesn’t quite fit its requirements; or, conversely, it might leave a position unfilled for a long time until it can find the person it really wants. “You’ve got to be a little bit more flexible than that if you’re building a capability that will fit with a lot of other partners,” he stated.
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Innovation Policies for the 21st Century: Report of a Symposium Next, Dr. Lonnie Edelheit, former senior vice president of Corporate R&D at General Electric, asked Dr. Marburger what he sees as the role of government in such enterprises. Since the kind of undertaking Dr. Marburger proposes demands integration, as well as management and leadership, he asked: “Is there enough of that in the government, and where should it be?” In his response, Dr. Marburger noted that agencies like the National Science Foundation (NSF) increasingly fund theme-based programs—although they continue to be peer reviewed and merit based. For example, NSF funds centers that conduct competitions based around particular themes, such as materials research. In addition to this thematic focus, NSF also often requires these centers to cooperate with regional industry and state offices. Reflecting this stipulation, proposals from around the country often include testimonials from regional business groups and state and local government officials. A tension exists within funding agencies between two desires: to have money in big, undifferentiated pots to respond to unsolicited proposals and, increasingly, to hold out a share for fairly well-defined programming in a field such as nanotechnology or information technology. At the agencies that fund extramural programs, Dr. Marburger said, a trend over the past decades of reserving more and more of the money for theme areas is discernible. “That’s quite reasonable,” he commented, “that’s the sort of thing you want.” There are currently some 27 nanotechnology centers being sponsored by four or five federal agencies, and OSTP tries to coordinate this “interesting phenomenon” by keeping track of what the centers are doing and by making sure that the agencies talk to each other about how the capabilities of the different centers fit with one another. Having peer-reviewed, merit-based grant awards is therefore consistent and compatible with the type of development that Dr. Marburger deemed effective. Referring to the five points mentioned by Dr. Marburger, the next question concerned the environmental and health aspects of regional development. Dr. Marburger explained that all such activity takes place in a societal context and that responsibility for governing its different parts lies with different authorities. To illustrate, he noted that environmental issues are usually subject to a licensing process, building permits, zoning, and so on, all of which are part of a complex of issues that have to be managed together. Typically, it is possible to set up a system of licensing and regulatory control over new business, especially in the high-tech sector. If hazardous chemicals or operations are involved, the system may possess “very antigrowth, very inhibitory” features, he said, adding: “That needs to be worked out with local authorities so that you can have responsible growth.” One of the more interesting phenomena that Dr. Marburger had seen on Long Island, where a very high degree of environmental consciousness existed, was a coalition of environmental-advocacy groups that had been formed to work with developers and the business community. “They realized that if you tried to hold back all development, then you’d get a fragmented, irresponsible, not very
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Innovation Policies for the 21st Century: Report of a Symposium efficient, and environmentally destructive pattern of development,” he recalled. “So the two sides sat down and worked out a pattern of development priorities,” one result of which had been the Long Island Pine Barrens Initiative. Such achievements are, therefore, within reach, but leadership and “a very careful weighing of the pros and cons” are indispensable. Some types of operations are simply not compatible with certain regions, Dr. Marburger warned: “You can’t just plop down a manufacturing facility that uses large amounts of chemicals in an environmentally sensitive region without everyone understanding what’s happening.” So a role for government does indeed exist, but because the execution of social requirements is usually very distributed, it could not be carried out from the top-down. Accounting for part of the complexity is the fact that enterprises around the country are growing up in the context of environmental and health regulations administered at federal, state, and local levels. A[n unidentified] questioner observed that size and resources afford the United States a very big advantage in a global economic environment that is growing much more competitive, but that other countries have achieved greater government/private-sector coordination. He asked whether Dr. Marburger thought that, in the new environment, it would make sense for the United States to have more of the kind of coordination seen elsewhere and how he thought it might be structured. Dr. Marburger acknowledged “the focus that other countries are able to give to economic development,” along with the achievements that focusing their resources has produced, as a “scary phenomenon.” He asserted, however, that opting for such a strategy presumes an ability to foresee what would add the most value in the future. Noting that the huge diversity that the United States has and will retain is one of its advantages, he stated that he hoped that, in the end, the U.S. approach of relying on diversity and market-based planning would provide the country with a number of different models in a number of different areas. “Our size and experience in this, and the fact that we don’t constrain all [our] institutions to the same model, makes us an ongoing laboratory,” he said. The fact that the country’s research parks are growing up in what Dr. Marburger called “different governmental ecologies”—under different regulatory environments, in different cultures—impressed him, therefore, as a source of strength. He praised the efforts of such organizations as the AURP to communicate with each other and to engage in sharing best practices and similar activities. Conferences like the one he had addressed the previous month attract not only those who manage the research parks but also representatives of state and federal governments, who are watching developments. “We’re getting educated,” he stated, “and we have confidence in our rational ability to make things work.” It was because no one has an economic model that forecasts what would work in the future, Dr. Marburger stressed, that the simple fact of the United States’ huge capacity place it in what would ultimately be a safer position. The one indicator that is always hopeful for the United States is the scale of its
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Innovation Policies for the 21st Century: Report of a Symposium economy and the very large number of research centers it has. “But there’s the rest of the world out there, and it is developing, and at some point we will just be a part of this developing world,” he said. Responding to a question from Gregory Schuckman of the University of Central Florida about forecasting future workforce needs, Dr. Marburger noted that, while the issue was both extremely important and interesting, there is no model as yet that is capable of predicting success in economic development or that can predict future technical workforce needs. The jobs of engineers, technicians, and scientists are changing just as rapidly as jobs in other sectors: Entire categories of technical work have disappeared during the decades of the information-technology revolution. In the same way that office productivity has increased—as measured, perhaps, in the number of people required to generate a certain number of pages—the science and engineering community have become more productive. But as “we do not have a very good handle” on the rapid changes in patterns of production and the relation of the workforce to production, he was skeptical about predictions regarding the workforce. Trends could be observed. There was no question that every developed country in the world is concerned about its engineering workforce in light of developments in China, but the rate at which China appears to be outproducing the rest of the world is probably not sustainable. “We’re not working in linear systems here,” Dr. Marburger declared. “Those rates are going to turn over eventually, and I don’t know what the forces are that will turn them over.” How all those being trained in Asia would be absorbed into the technical economy was unclear. What is known, Dr. Marburger said, is that understanding of the natural world in fairly sophisticated terms, and particularly technology, will be a part of our way of life in the future. It will be important for people to understand how the world works in some quantitative detail in order to have any job in any part of the economy. He pointed to this recognition as “one of the deep philosophical perspectives” behind the concept of No Child Left Behind: “We’ve got to make sure that our young people are adequately prepared for these futures.” Whatever future jobs look like—whether in engineering, in a new form of business training, or in other fields—better quantitative skills would be imperative. There was, however, some good news. The proportion of those graduating high school having taken a course in physics has been going up steadily in the past two decades to surpass one-third, compared with about one-quarter 10 or 12 years earlier. The same applies to precalculus: About one-fourth of current U.S. high school graduates took a precalculus course and the proportion has been rising steadily for the past 10 years. “Something is happening out there,” said Dr. Marburger. “Somebody is getting the picture.” Still, many were flunking their first-year college courses in math and science and were becoming discouraged. “They came wanting to be scientists and engineers, and we turn them away,” remarked Dr. Marburger, recalling that he himself had taught freshman physics and knew how tough introductory courses could be.
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Innovation Policies for the 21st Century: Report of a Symposium In the interest of producing more scientists, teaching methods need to be altered to take advantage both of the knowledge with which young people are in fact equipped with and of their desire to understand how the world works. Dr. Marburger declared himself “pretty optimistic” overall. While conceding that one could point to quite a number of “scary indicators,” he said that it was part of his job to worry about precisely what those indicators meant. As the President’s Science Adviser, he could be an advocate or a counselor. While he acts as the former at times, there are times when he felt obliged “to sit back and say, ‘What does this all mean?’” He said that he is working hard on this problem, which is complicated by the existence of conflicting analyses. Earlier the same morning, he had conferred with National Research Council staff engaged in a study of these questions, and they shared his concerns. All felt the need for a much improved framework for gathering, using, and analyzing statistics relating to the workforce and innovation. “So we’ll keep trying,” he concluded, “and I think trying is one of the most important things that you can do.” Dr. Spencer, ending the session, allowed that the news conveyed by Dr. Marburger about the number of high school students taking physics was the best thing he had heard up to that point in the day’s meeting.
Representative terms from entire chapter: