REBUILDING A REAL ECONOMY

Unleashing Engineering Innovation

SUMMARY OF A FORUM

Prepared by Steve Olson for the

NATIONAL ACADEMY OF ENGINEERING OF THE NATIONAL ACADEMIES

THE NATIONAL ACADEMIES PRESS

Washington, D.C.
www.nap.edu



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Rebuilding A ReAl economy unleashing engineering innovation S u m m A Ry o F A F o R u m Prepared by Steve Olson for the The NATIONAL ACADeMIeS PReSS Washington, D.C. www.nap.edu

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THE NATIONAL ACADEMIES PRESS 500 Fifth Street, N.W. Washington, DC 20001 NOTICE: The subject of this report is the forum held during the 2009 Annual Meeting of the National Academy of Engineering. Opinions, finding, and conclusions expressed in this publication are those of the forum participants and not necessarily the views of the National Academy of Engineering. International Standard Book Number-13: 978-0-309-15007-1 International Standard Book Number-10: 0-309-15007-8 Copies of this report are available from the National Academies Press, 500 Fifth Street, N.W., Lockbox 285, Washington, DC 20055; (888) 624-8373 or (202) 334-3313 (in the Washington metropolitan area); online at http://www.nap.edu. For more information about the National Academy of Engineering, visit the NAE home page at www.nae.edu. Copyright 2010 by the National Academies. All rights reserved. Printed in the United States of America

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The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Charles M. Vest is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examina- tion of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council. www.national-academies.org

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Preface The financial crisis that began in 2008 is a stark demonstration that we as a nation take great risks when we build too much of our economy on a base that does not create real value. Relying on vaporous transac- tions to generate wealth is no substitute for making real products and providing real services. In the 21st century, the United States and the rest of the world will face some of the greatest challenges of the modern age: feeding a growing population, generating adequate energy without destroying the environment, countering chronic and emerging infectious diseases. The first decade of the new century has shown that technologi- cal innovation is essential for the United States and other countries to meet these challenges. At the 2009 Annual Meeting of the National Academy of Engineer- ing in Irvine, California, a public forum entitled “Rebuilding a Real Economy: Unleashing Engineering Innovation” brought together seven prominent leaders of the innovation system to discuss the challenges fac- ing America. Jean-Lou Chameau, president of the California Institute of Technology, described how research universities can foster not only the new ideas at the heart of innovation but also the translation of those ideas into new products and services. Peter Diamandis, chairman and CEO of the X PRIZE Foundation, explained how large prizes can catalyze inno- vation to solve outstanding technological challenges. Judy Estrin, former chief technology officer of Cisco, emphasized the twin needs for taking risks and thinking long term. Chad Holliday, former chairman and CEO of DuPont, pointed out very real competitive threats facing our nation and suggested how we could counter those threats. Steve Koonin, under secretary of science at the Department of Energy, described necessary steps to provide the United States with secure and sustainable sources 

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i PREFACE NAE President Charles M. Vest introducing the forum participants. Photo by Tom Sullivan. of energy. Raymond Lane, managing partner of Kleiner Perkins Caufield and Byers, laid out actions the government can take to promote innova- tion in the renewable energy sector. And Tony Tan Keng Yam, chairman of the National Research Foundation of Singapore, executive director of the Government of Singapore Investment Corporation, and former deputy prime minister of Singapore, offered an international perspective on the U.S. prospects in the global economy. The insights of the panel members cut to the heart of what this nation needs to do to remain a global leader in the turbulent world of the 21st century. The forum was hosted by Ali Velshi, the chief business correspon- dent for CNN and host of the program “Your Money.” Engaging a reporter to lead the discussion was a departure for the National Acad- emy of Engineering, and it was extremely successful. Velshi has an extensive background in topics related to the economy and valuable firsthand experience in talking with people throughout the country about their concerns and hopes. His participation in the forum made for a lively and productive discussion. This summary, which was written by Steve Olson, captures the main

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ii PREFACE points made by the forum participants with the aim of encouraging fur- ther reflection and discussion. As the panelists pointed out, no single action can reenergize our innovation system. A portfolio of interconnected and interdependent initiatives must be undertaken to generate new knowledge and technol- ogy and move that new knowledge successfully into a competitive world marketplace. But the panelists clarified the goal toward which we must strive and some of the most important steps we need to take to achieve that goal. Charles M. Vest President, National Academy of Engineering

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Contents 1 The Ongoing Crisis 1 2 Key Innovation Sectors 7 Research Universities, 7 Entrepreneurs, 8 National Laboratories, 10 Manufacturing, 11 3 Policy Initiatives 15 Energy Policy, 15 Incentive Prizes, 18 The Example of Singapore, 20 Education, 22 4 Prospects 25 APPENDIXES A Forum Agenda 27 B Panelists’ Biographies 29 ix

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