Session VI

Roundtable—Next Steps for Hawaii

Moderator:
M.R.C. Greenwood
University of Hawaii

Participants:
The Honorable Mazie Hirono, United States House of Representatives
The Honorable Colleen Hanabusa, United States House of Representatives
Peter Ho, Bank of Hawaii and APEC 2011 Hawaii Host Committee
Richard Rosenblum, Hawaiian Electric Company
Donald Straney, University of Hawaii at Hilo
Charles Wessner, The National Academies

CONGRESSWOMAN MAZIE HIRONO

Congresswoman Hirono referred to Hank Wuh as one of the “great innovators and disrupters in our community,” and emphasized that “we need to identify them and support what they’re doing.” She recalled the governor’s first task force on science and technology, convened 15 years ago, which reported on the importance of recognizing the University of Hawaii as an economic engine and the importance of commercializing the research there. “Here we are,” she said, “basically talking about the same thing. We do know what we need to do, it’s just the doing of it we haven’t mastered.” She said that she had read the Innovation Council’s report with approval and said that “nothing could be more important than the education component.” She noted that one of its recommendations was to encourage the entrepreneurial spirit at the university, “but we all know it needs to begin long before college. This is why it’s important for us to support robotics in our public schools, for example, to be sure we have white boards or smart boards in our schools. I visited classes where the kids are really engaged by using technology, and we already know that. I know that everybody here has great ideas, but the task is truly to stay the course. We have been talking about this for a long time in this state.”



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Session VI Roundtable—Next Steps for Hawaii Moderator: M.R.C. Greenwood University of Hawaii Participants: The Honorable Mazie Hirono, United States House of Representatives The Honorable Colleen Hanabusa, United States House of Representatives Peter Ho, Bank of Hawaii and APEC 2011 Hawaii Host Committee Richard Rosenblum, Hawaiian Electric Company Donald Straney, University of Hawaii at Hilo Charles Wessner, The National Academies CONGRESSWOMAN MAZIE HIRONO Congresswoman Hirono referred to Hank Wuh as one of the “great innova - tors and disrupters in our community,” and emphasized that “we need to identify them and support what they’re doing.” She recalled the governor’s first task force on science and technology, convened 15 years ago, which reported on the importance of recognizing the University of Hawaii as an economic engine and the importance of commercializing the research there. “Here we are,” she said, “basically talking about the same thing. We do know what we need to do, it’s just the doing of it we haven’t mastered.” She said that she had read the Innovation Council’s report with approval and said that “nothing could be more important than the education component.” She noted that one of its recommendations was to encourage the entrepreneurial spirit at the university, “but we all know it needs to begin long before college. This is why it’s important for us to support robot - ics in our public schools, for example, to be sure we have white boards or smart boards in our schools. I visited classes where the kids are really engaged by us - ing technology, and we already know that. I know that everybody here has great ideas, but the task is truly to stay the course. We have been talking about this for a long time in this state.” 125

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126 BUILDING HAWAII’S INNOVATION ECONOMY CONGRESSWOMAN COLLEEN HANABUSA Congresswoman Hanabusa said she appreciated the wonderful opportunity “to actually see something start.” She was referring to President Greenwood’s first State of the University speech in February 2010, from which she cited three main points. One was the need for money for infrastructure, “and the university did receive funding for that.” A second point was that Hawaii has to invest in the workforce that the state will need to develop areas of particular strength, includ - ing cancer research, alternative sources of energy, vulcanology, astronomy, and information technology. A third point is the need to look toward the future in a focused way. “We all have to leave here feeling that we have defined where we want to be and how we can get there. We’re not going to be the best in every- thing. Let’s decide what we can realistically be the best in, and let’s funnel our resources to achieve that.” PETER HO Mr. Ho, who said he would speak in his capacity as president of APEC, cited the management professor Peter Drucker in observing that “in business, there’s innovation and there’s marketing, and everything else is just a detail.” “As a finance person myself,” he said, “I take a little offense to that, but I think there’s a lot of sense to it as well.” Mr. Ho said that APEC could potentially mean a great deal for Hawaii’s business community, supported in powerful ways by in - novation and marketing. With the APEC meeting in November 2011 in Honolulu, “really what we’re talking about is a world-class exposure opportunity for our community.” Honolulu would host President Obama and other leaders from the 20 largest Asia-Pacific economies, who will be accompanied by their ministers. They would be joined by upwards of 1,000 CEOs and senior executives and some 2,000 members of the global media, along with “general members of the global community,” the representatives of think tanks, and other organizations that follow global trends. Joining the Wider Asian-Pacific Community “With that opportunity for us to host people who don’t often head into our neck of the woods,” he said, “come broader opportunities for innovation as well as for marketing.” In terms of innovation, Mr. Ho said, an obvious one is the op- portunity to “put a stake in the heart” of the problem of how to evolve from just a “sun, sand, and surf marketplace in the visitor industry” to a place for serious meetings, conventions, and other business settings for the visitor industry. An - other opportunity, he said, is to use the event to “help drive our own community in its thinking from primarily domestic” to more actively international, as part of the wider Asia-Pacific community. Finally, he said, the state can make good use

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127 SESSION VI of the Hawaii Host Committee, which he had chaired for the past year. This truly representative committee, he said, represents “a truly different approach to doing things than we’ve had in the past. People will come for business conventions as they recognize how serious we are about innovation.” In addition, he said, would come obvious marketing opportunities, including clean energy technology, the economic power of the UH research programs, and the growing expertise in the health sciences. “These are strengths that people don’t always attribute to Hawaii, but in fact we do have those resources, and APEC is simply a great opportunity to expose them to the world.” RICHARD ROSENBLUM Mr. Rosenblum, a nuclear engineer, said he had been recruited just over two years previously to be president of Hawaiian Electric after 32 years in the utility business at Southern California Edison. In late 2008, the state of Hawaii, along with the Department of Defense and several other constituencies, made and signed an agreement to “break Hawaii’s addiction to oil,” he said. The goal was to reduce the consumption of fossil fuels in Hawaii by 70 percent in a little over 20 years. “To the best of my knowledge, there is no country, state, or institution that has ever been that brave because at the same time they are saying we don’t know how to do this, but we’re going to find a way.” This bold step, he said, was economically essential. In 2008, the domestic product of Hawaii was nearly $60 billion, of which just over $8 billion was spent on fossil fuels. “Think of an economy with almost a 15 percent hole in the bottom, draining the economic vitality. It is not survivable.” The goal of the state, he said, was to plug that hole, using indigenous resources to the extent possible. “This agreement wasn’t a choice, it was a necessity.” About one-third of fossil fuel use goes to long-distance transportation, he said. Another third goes to short-distance cars and trucks, and the final third to electricity. Electricity is the most straightforward to address, he said, because “there’s one monolith in that sector. As I said, I was trained as an engineer, and when the National Academy of Sciences says that global warming is real, stop arguing.29 Global warming is real, and we’re not going to change it unless the whole society decides to end our dependence on fossil fuels and go to clean energy sources.” He added that this presents a strategic opportunity for Hawaii— not just to reinvigorate the economy, but also to create jobs. 29 The National Academies has published more than 15 publications about the science and policy implications of global warming and climate change. See, for example, National Research Council, Understanding Climate Change Feedbacks, Washington, D.C.: The National Academies Press, 2003.

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128 BUILDING HAWAII’S INNOVATION ECONOMY Developing and Exporting Clean-energy Knowledge A clean energy mandate also creates intellectual capital, Mr. Rosenblum said. “The bad side of the initiative is that we don’t know how to do it. The good side is, we’re going to figure it out. And when we figure it out, we’ll have knowledge other people will need. The reasons for moving Hawaii off fossil fuels are the same reasons the rest of the world will eventually have to move off fossil fuels. And when they do, the people who did it first and developed the knowledge have a unique opportunity to capitalize on that. So while Hawaii is not going to be a manufacturing complex, even for windmills, we can be an exporter of knowledge and drive our economy with things we’ve learned.” DONALD STRANEY Chancellor Straney, of the University of Hawaii at Hilo, said that he, too, had come to Hawaii only recently, but he already felt a difference. He said it would have been unlikely to have a discussion “as exciting and promising as this one in the state I came from, California. There is a sense of future and a sense of prom - ise here, and in education, that’s what we need to keep things moving forward.” He added that he wished for a way to translate and communicate some of the symposium to every third-grader in Hawaii, the level “where people or students make their commitment to technical and scientific futures and get the fundamental excitement that can shape their lives in a productive way. It would be interesting to take these topics down into the schools, as Congresswoman Hirono mentioned, and use them as a hook to draw students forward.” Learning to Use Knowledge in “Real Life” Chancellor Straney said he agreed with President Greenwood’s desire to make innovation and entrepreneurship part of the University of Hawaii curricu- lum. UH Hilo was then in the process of writing its vision statement, he said, and one component under discussion was a requirement that all students take an internship or other practical experience in their discipline. “We’re very good at teaching people theoretical foundations,” he said, “but in my experience, it’s when you go out and actually use knowledge that you begin to understand how it works in real life. We need to help students understand what to do with a good idea when they have one. In regard to technology transfer, he noted that other universities where he had worked managed this function through an independent foundation. Aside from managing patents and licensing, he said, there were many things a university can do to help small business, such as providing access to the instrumentation on cam- puses and develop partnerships with people who don’t have access to cutting-edge equipment. “This can make a huge difference to a start-up company or someone

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129 SESSION VI moving into a new technology area.” He said that at his previous institution in Los Angeles, “We simply made it known that we would rent time on the scanning electron microscope we had, and that drew a lot of interest from the small busi - nesses in our vicinity. They wanted not just to use that piece of equipment, but also to talk with us about how we could help meet their needs through expertise.” Finally, he said, the challenge of the tensions that sometimes arise between the various cultures of Hawaii might be turned to advantage. He said that as a biologist, he recognized that the easiest way to generate innovation in the natural world is to isolate an organism and let it respond to local conditions. Hawaii is certainly isolated, he said, and provides contexts and experiences not available on the mainland or the rest of the world. “To what extent can we find ways to make what is unique about Hawaii, particularly the cultural aspects, motivate and inform what we do?” He referred to Dr. Wuh’s “really trenchant example” of rec - ognizing that in a culture’s resistance to organ transplantation lay an opportunity for innovation that could change things not only for that culture but for people around the world. “I think it would be helpful for us to reflect fairly deeply on how to take advantage of the tensions between the cultures we have, and to view them positively rather than as constraints that needs to be overcome.” CHARLES WESSNER Dr. Wessner praised the very high level of the presentations at the sympo - sium, as well as the state’s positive attitude toward its innovation challenges. “One of the things you’ve talked about a lot here is your diversity and your ethnic roots. But what I hear is actually America ringing here. And as Americans, we are interested in solving problems, not just talking about them.” He summarized this positive attitude by saying that, in contrast to many other states, “you get it. You get the need for innovation. And the thing I did not know, and I don’t think our committee knew well before today, is that you have the platforms for innovation. You have superb opportunities in energy, health, astronomy, and other areas, and you can see how to use them.” At the same time, said Dr. Wessner, the state will have to work hard to gener- ate the revenue it needs to drive innovation in those promising areas. He urged the state’s leaders to start with senior government officials who had come to Honolulu from Washington, D.C., to participate in this symposium. This group, which includes Ginger Lew of the National Economic Council, Barry Johnson of the Economic Development Administration, Jerry Lee of the National Cancer Institute, and Roger Kilmer of the Manufacturing Extension Partnership program, “represents an outreach from the federal government that understands what you are trying to do.” Another pressing need he addressed was equipping the university with the resources it needs. “You already recognize the role of the university, which is to serve as an engine of economic growth. You already have effective presidential

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130 BUILDING HAWAII’S INNOVATION ECONOMY leadership in place at the University of Hawaii. Now you need to give that president the authority needed to capitalize on the resources and opportunities the university provides. In some cases, this may mean removing regulations that were designed to fit the problems of the last century, thus removing impediments to the opportunities of the future.” Removing Barriers to Innovation One of the messages he would propose, Dr. Wessner said, is to “clear out the junk.” The state is held back by mindsets, regulations, and other barriers to innovation and new business formation, he said. He referred to Mr. Goldin’s com- ments about energy and about bringing more broadband capacity to Hawaii. “You want to make it easy to come here, not difficult. You want to make it attractive to stay and to start a business. With a million people, you won’t be able to do this entirely alone, so build that environment to welcome skilled people, capital, and ideas, and to retain the graduates of this excellent university.” He also urged local leaders to develop new funding mechanisms, especially an innovation fund for the state and a seed fund for the university. He referred to Mr. Goldin’s suggestion of a “war chest” that could allow the leadership in the university “to build up a department, to meet a need, and to adjust that need.” He supported the idea of expanding or directing the use of the barrel tax for some of this. “I know that nobody likes a tax, or anything that sounds like a tax. But OPEC taxes us regularly, and one response is to tax ourselves to work out from under OPEC’s tax.” Dr. Wessner closed by complimenting the state, university, and business leadership for “getting it,” and urged still more focus, speed, and critical mass. He praised the leadership of Governor Abercrombie and urged the state legislature to “step up and help provide the programs, the space, and the reforms that are necessary. I don’t think you can stay where you’ve been, and the need is to move from there with some speed.” DISCUSSION Dr. Greenwood recalled the remarks of Dr. Walshok about “how you moti- vate people to come together and focus on certain initiatives, or, as we prefer to say here, how you get everybody in the canoe paddling in the same direction.” She said that lessons from San Diego “are ones I hope we can use, because we will need the support group, and we will need to forge partnerships with the university, the business community, and the citizens. Partnerships have to be built with real commitment to common objectives, and not just a cordial associa - tion.” She also reminded her audience that San Diego was a “barren field” when Dr. Walshok and her colleagues began building programs, and “tourism was a

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131 SESSION VI mainstay. It started from two or three or four committed people and companies, drew a lot of help from the localities, and then things began to blossom.” She said that in a small state like Hawaii, people have to work together and to remove barriers. “It has to move beyond the one-industry dominance,” she said. “A big thing comes and hangs on for 10 or 15 years and then is gone.” Building a New Model for Hawaii To build a new model, Dr. Greenwood suggested that the first step is to “be sure we’ve got what we need to be competitive, and connected to the rest of the world.” This included the speed of Internet connections, access to those connec - tions, and wise use of broadband resources. Second, she said, “let’s take these areas where we already have prominence and dominate them. Let’s not just be good, let’s be the leader.” Third, she urged her colleagues to “find those areas where we’re not yet dominant but have some very special opportunities.” From the university’s point of view, she proposed the health sciences and the research-based businesses that can flow from that field. “We do have some strength in the health sciences,” she said, “and lately it’s been growing. But compared to other major research universities we can probably improve by over 50 percent and maybe as much as 100 percent by attracting investment both at the federal and the state levels, and overcoming some of the situations that make it hard to do business here.” Dr. Greenwood closed by saying that the group had learned a great deal in the past two days, and it was now time to act. “It’s not a time to discuss what we could do, it’s now time to discuss how to do what we know we need to do,” she said. “If we don’t do it, this small but wonderful state of Hawaii is not going to be on the cutting edge in two decades. If we do act, we may be an example that everyone else admires, and I’d sure like to be part of that story.” Congresswoman Hirono added that Hawaii is “not in this alone, because as a country we have recognized the need to innovate and to become much more successful in competing with the rest of the world.” She said that during her last four years in Congress, she had supported an innovation agenda that provided loans, grants, and stimulus funding for alternative energy and research. “I know this administration is also very intent on working with us so that our whole country can move forward.” Broadband as “Mission Critical” As the symposium concluded, several participants returned to the need to improve broadband access, data storage and processing abilities, as well as IT and software skills. Dr. Greenwood assured one speaker that the issue had been a priority since her arrival several years ago, and had only grown in significance.

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132 BUILDING HAWAII’S INNOVATION ECONOMY “This is not just another priority where some progress would be nice,” she said. “This is ‘mission critical’ for the state. We have to recognize that we’re not going to be able to expand our astronomy program, develop smart software, or attract the high-tech businesses we want unless we have these tools.” Dr. Greenwood asked for comment from David Lassner of the UH, who chaired the broadband task force, and he provided the “good news” that Recovery Act funding was allowing the delivery of fiber optic cable to every public school, college, and library in Hawaii, which would provide one major piece of the state’s broadband needs. The final speaker, Chuck Gee, a member of the UH Board of Regents, ap- plauded this particular good news. He praised symposium participants for their action-oriented discussions. “I didn’t know what I expected to find after spending two days here,” he said. “We’re a state that’s very good at planning, and some of our plans go back a long way, and they’re still sitting on someone’s shelf. But now I am reminded by these speakers how really good a university we have, and I see this university becoming a catalyst for making things happen. That is the new wrinkle. The kinds of fields we have heard about are compatible with who we want to be. Tourism is a clean industry, and so are clean energy, space research, health sciences, and digital media. Speaking for myself and many of my fellow regents who have sat through this symposium these past two days, you have our total support, and thank you to our visitors for bringing a new sense of excitement as to where we can go from here.”