4

Building Effective Partnerships

Rebuilding America’s competitiveness is too big a job for any one sector, whether academia, business, or government. The third session of the workshop discussed how partnerships among sectors might also address the challenge.

In this session, three speakers examined the prerequisites for successful partnerships. The director of the Advanced Research Projects Agency-Energy (ARPA-E), Arun Majumdar, reviewed ARPA-E’s work and cited the need for alignment of innovation agendas among government, industry, and academia. C. D. Mote, Jr., Regents Professor and former president of the University of Maryland, described the central role of universities in the transition from a national innovation paradigm to a global innovation paradigm. And Mary Good, the Donaghey University Professor at the University of Arkansas, noted the relative lack of a national strategy in the United States compared with other countries and emphasized the potential of universities to step into the breach and support innovation within states and regions.

THE ADVANCED RESEARCH PROJECTS AGENCY-ENERGY

A prominent recommendation of the original 2005 Rising Above the Gathering Storm report was for the creation of an agency to foster “out-of-the-box” energy research that industry cannot support due to its high risk. Success in these high risk research areas could produce dramatic benefits for the nation. Arun Majumdar provided a two-year report on the agency



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4 Building Effective Partnerships R ebuilding America’s competitiveness is too big a job for any one sec- tor, whether academia, business, or government. The third session of the workshop discussed how partnerships among sectors might also address the challenge. In this session, three speakers examined the prerequisites for success- ful partnerships. The director of the Advanced Research Projects Agency- Energy (ARPA-E), Arun Majumdar, reviewed ARPA-E’s work and cited the need for alignment of innovation agendas among government, industry, and academia. C. D. Mote, Jr., Regents Professor and former president of the University of Maryland, described the central role of universities in the transition from a national innovation paradigm to a global innova- tion paradigm. And Mary Good, the Donaghey University Professor at the University of Arkansas, noted the relative lack of a national strategy in the United States compared with other countries and emphasized the potential of universities to step into the breach and support innovation within states and regions. THE ADVANCED RESEARCH PROJECTS AGENCY-ENERGY A prominent recommendation of the original 2005 Rising Above the Gathering Storm report was for the creation of an agency to foster “out-of- the-box” energy research that industry cannot support due to its high risk. Success in these high risk research areas could produce dramatic benefits for the nation. Arun Majumdar provided a two-year report on the agency 23

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24 RISING ABOVE THE GATHERING STORM and summarized its work as a catalyst of government-university-industry- national lab partnerships. Majumdar stated that ”the mission of ARPA-E is to fund projects that will develop transformational technologies that reduce America’s depen- dence on foreign energy imports, reduce U.S. energy-related emissions, improve energy efficiency across all sectors of the U.S. economy, and ensure that the United States maintains its leadership in developing and deploy- ing advanced energy technologies.”1 The agency’s mission is patterned on that of the Defense Advanced Research Projects Agency, which was created during the Cold War to foster radical innovation in defense-related tech- nologies. However, there is a fundamental difference between DARPA and ARPA-E, Majumdar observed. The defense sector is an essentially closed sector of the economy in that it has an eventual customer (the Department of Defense). The energy sector is almost completely open in the sense that the eventual customer could be businesses, consumers, or government. ARPA-E therefore needs to support projects that ultimately will succeed in the marketplace and enable businesses. “It’s a different ball game than the DARPA model,” he said. ARPA-E looks to create technologies that will induce the private sector to scale up those technologies, “because scaling is what industry does really well.” Examples of Success Majumdar cited two examples of the approach ARPA-E has taken. The first is the Batteries for Electrical Energy Storage in Transportation (BEEST) program. Instead of incrementally improving the lithium ion battery, the program sought a battery that would give electric cars a longer range and cheaper operating costs than gasoline-based cars. Such a battery needs double the energy density of today’s lithium-ion battery at one-third the cost. “This is a really hard problem,” said Majumdar. The program has been supporting several promising approaches. One is an “all-electron battery” being developed at Stanford University that moves electrons rather than ions in the battery. Another is a lithium air battery that provides extremely high energy densities. “People thought this was impossible. Now they’re making modules of these, and of course they want to get into manufacturing.” Majumdar also cited a biofuel example. Photosynthesis is an inefficient process for converting sunlight into energy, so ARPA-E is supporting com- parable processes with much higher efficiencies. One such process, called Electrofuels, uses microorganisms to harness electrochemical energy from wind, solar, nuclear, or other energy sources to convert carbon dioxide 1 See http://arpa-e.energy.gov/About/Mission.aspx.

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25 BUILDING EFFECTIVE PARTNERSHIPS into liquid fuels without using petroleum or biomass. Already, teams at the Massachusetts Institute of Technology, the University of Massachusetts Amherst, OPX Biotechnologies, and North Carolina State University have been using such a process to make vials and bottles of oil. “It’s not a big plant making millions of gallons, but you’ve got to start somewhere, and it’s a completely new way of making oil.” Arun Majumdar: “Scaling is what industry does really well, and the government does not do well.” Creating New Opportunities to Learn Rather than following existing learning curves, ARPA-E seeks to cre- ate new and much shorter learning curves, said Majumdar. Some of the approaches it is taking will fail. But “we call them not failures, but oppor- tunities to learn, and we go back and try again.” Similarly, rather than relying on a traditional pipeline from research to development to commercialization, ARPA-E tries to compress the process by putting scientists, engineers, technologists and entrepreneurs together. The idea is to blur boundaries so that “scientists educate engineers about what science could do to change the system, and engineers look at systems and educate the scientist about what science is required to change the ball game.” Speed is of the essence, said Majumdar. ARPA-E is asking the techni- cal community to work quickly, and the agency is itself setting records in reviewing proposals and getting funds to investigators. “In the federal government, this is a big deal. Contracting time is now down to two to three months. We’re trying to push the system as hard as we can and really engage the stakeholders in this.” Success in the energy field will not occur immediately. It will take at least 15 to 20 years to change energy technologies in the United States or globally in a major way. In the short term, ARPA-E is measuring success in terms of how many good people and projects it is supporting, whether small businesses have been created from universities, how much intellectual property has been created, and the amount of money the private sector is investing in the technologies that are emerging from the agency’s efforts. ARPA-E also measures its success in terms of the partnerships created among government, industry, and academia. The need is for “alignment of innovations,” said Majumdar, “not just in science and technology but in finance and markets, policy, education, and society.”

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26 RISING ABOVE THE GATHERING STORM GLOBAL INNOVATION PARTNERSHIPS A transition has taken place where the world has moved from a national innovation paradigm to a global innovation paradigm, said C. D. Mote, Jr., Regents Professor and former president of the University of Maryland. In the past, the federal and state governments were connected to universities and to industry in a national innovation platform. Each sector had its own responsibilities for funding, innovation, education, and commercialization. This partnership contributed substantially to the growth of innovation in the United States and shaped important aspects of that platform. “This national innovation platform died, basically, around 1990,” said Mote, for several reasons. The Cold War ended, which had the effect of adding more than 2 billion people to the knowledge economy. “They wanted to share in the market economy and benefit from it.” Also, the Internet was commercialized in 1993 and became the preferred way to communicate globally, with search engines designed specifically to make all information available. High-speed communications spread all over the world, making everyone the neighbor of everyone else. Globalization ac- celerated through the 1990s. The Cold War paradigm of “controlling information and innovation” for commercial and security advantages has been replaced by a paradigm of global innovation because information cannot be controlled. Mote cited a sports analogy by describing the Cold War innovation strategy as a de- fensive strategy. “You don’t score as many points as you might, but you keep your opponents from scoring more points than you do, so you win the game. However, if you can’t stop your opponents from scoring points, then the only way you’re going to win the game is to score more points than they do. That calls for an offensive strategy, and that’s the one we’re in.” Score points fast and often. The global innovation paradigm is based on partnerships to create information and accelerate innovation. It places an emphasis on talent, employment, markets, manufacturing, research, and investment. It short- ens product life cycles, accelerates change, grows consumer markets, and creates a high demand for “front edge” (advanced) employee skills and capabilities. “That’s one reason why we have high unemployment and high job opportunities all at the same time,” said Mote, because “employers are looking for front-edge skills.” In this new paradigm, partnerships among governments, universities, and industries occur globally on all scales. Governments encompass na- tional, state/provincial, regional, and city governments. Industries are multi- national, national, and local. Colleges and universities oversee consortia, campuses, departments, faculty members, and students. “All combinations [occur] on a global platform instead of on a national platform.”

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27 BUILDING EFFECTIVE PARTNERSHIPS C. D. Mote, Jr.: “Universities are ideally positioned to provide innovation services for the global platform enterprise.” Embracing the New Paradigm “Innovation” has become the answer to almost every “How will we . . . ?” question, said Mote. How will we improve the quality of life for all citizens? How will we stop pandemics? How will we solve climate change? The answer is always “through innovation.” One issue is how innovation scales on a global platform. Organizations and individuals tend to scale from the bottom up, while national governments tend to scale from the top down. Regions, communities, and states scale through a hybrid model that combines bottom-up and top-down innovation elements. Mote emphasized the special role that universities play in this new global innovation paradigm. Universities have almost all of the assets needed for local, regional, national, and global innovation. They can serve as technology incubators, consultants for industry, venture accelerators, conveners of investor networks, and sources of education and training. “Universities are ideally positioned to provide innovation services for the global platform enterprise,” said Mote, and “many universities in the United States are working in this direction.” One example that he discussed is the University of Maryland-China Research Park.2 Because of their unique and irreplaceable assets, universities need to be central players in the global innovation system, Mote said. “In fact, they’re the only organizations in our society that can do it.” THINKING GLOBALLY TO ACT LOCALLY Mary Good, Donaghey University Professor at the University of Arkansas, began by briefly reviewing the work of the Board on Science, Technology, and Economic Policy (STEP) at the National Research Council on international innovation programs. For several years, a STEP committee that she chairs has been comparing innovation systems around the world, including those of China, India, Germany, and smaller countries like Fin- land. Many governments, she said, have innovation as a national strategic objective. China, for example, has a research park in Shanghai that is led by a woman in San Francisco who recruits companies and people from all over the world to move to the research park to work. Cities like Bangalore 2 More information on this initiative is available at www.umcrp.umd.edu/overview.html.

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28 RISING ABOVE THE GATHERING STORM in India have become fully international, with major companies based in other countries playing prominent roles. Mary Good: The United States “does not have the focus on strategic de- velopment that you see around the rest of the world.” The STEP committee has been particularly interested in manufactur- ing in Germany, because it combines a large manufacturing base with high wages and social benefits that exceed those of the United States. A particu- lar asset in Germany is the system of Fraunhofer institutes, which are the product of government-university-industry partnerships focused on areas of applied research. These institutes run apprenticeship programs, Good noted, that could be a model for retraining programs in the United States. “We should look at the way those are organized to see if it would not make sense for the United States.” The United States, in contrast to other countries, does not have a national innovation strategy, with just a few exceptions. One exception is the ARPA-E program described by Majumdar, which has the potential to create world-changing industries. Another is the federal Small Business Innovation Research program, though that program “is on life support at the moment,” Good noted. Overall, the United States “does not have the focus on strategic development that you see around the rest of the world.” Implications for the States In contrast, STEP has found several instances of state-level initiatives, often driven by governors, that center on cooperation between government, industry, and universities. State initiatives tend to be different from each other because what works in one state will not necessarily work in another. But those differences are also advantages, because they allow states to take advantage of their unique assets. New organizations could reignite partnerships similar to those that have worked well in the past. For example, as noted by Mote, some uni- versities are in a position to pull together partnerships, especially with state aid (though states’ support for universities has declined markedly, Good observed). State innovation programs also could focus on the medium-size, small, and start-up companies in particular regions, “because in my opin- ion, that’s where most of the jobs in the United States are very likely to get created over the next 15 or 20 years,” said Good. These companies are lo- cally situated and can be stable contributors to local partnerships. “People should think about not just partnerships with IBM and General Electric but

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29 BUILDING EFFECTIVE PARTNERSHIPS also with the small [company] across the river that runs a reasonably-sized manufacturing facility and does it well.” Partnerships with universities and governments also can greatly benefit medium-sized and small businesses. Many do not have the resources to secure the modern equipment and analytical technologies needed to remain competitive. Universities, possibly with state support, could be a central laboratory for these kinds of businesses. State manufacturing extension programs also could provide a foundation to build central laboratories. Finally, Good advocated putting more effort into research parks that involve university-industry-government coalitions and into university incu- bators. The incubators at the University of Wisconsin and elsewhere could act as models for other universities, “because, frankly, many of us don’t run those very well.” The United States needs to figure out how to do things differently than it has in the past, Good concluded. “If we’re going to keep our small busi- nesses afloat, we’re going to have to figure out how to make these kinds of joint arrangements work.”

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30 RISING ABOVE THE GATHERING STORM BOX 4-1 State and Regional Reactions to Rising Above the Gathering Storm Although the original Gathering Storm report focused on recommendations for federal policy, the report’s message about the importance of education and research to building a strong 21st-century economy resonated with state and re- gional leaders. Examples of activities focused on state and regional responses to the report include: • he National Academies organized the Convocation on “Rising Above the T Gathering Storm: Energizing and Employing Regions, States, and Cities for a Brighter Economic Future,” which was held on September 28, 2006, in Washington, DC. The convocation featured participants from all fifty states. • t the request of Governor Arnold Schwarzenegger, the California Coun- A cil on Science and Technology prepared the report Shaping the Future: California’s Response to “Rising Above the Gathering Storm,” which contained recommendations to the governor and was released in January 2007 (report available at ccst.us/publications/2006/2006gatheringstorm. php). • he Arkansas Science and Technology Authority and the Arkansas STEM T Coalition co-sponsored the Conference on Rising Above the Gathering Storm: Energizing and Employing Arkansans for a Brighter Economic Future, held September 5, 2007, in Little Rock. • he Role of Engaged Universities in Economic Transformation: A Re- T gional Conference inspired by the National Academies Study, “Rising Above the Gathering Storm” was held October 15-16, 2007, in Ann Arbor, Michigan.