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The Proof and Promise of Innovation

  • Date: 03/24/2011
  • Author: Dr. Luis M. Proenza (President, The University of Akron)
  • Location: 2011 NEO Success Awards, sponsored by Inside Business Magazine, Beechwood, OH
  • Thank you, Lute, for that kind introduction. And, thank you for the invitation to join you for this awards luncheon.

    It is a pleasure to be here with you today, at a gathering that honors the type of people who made the 20th century the American century, and who will lead our success in the 21st century as well.

    The award recipients listed in today’s program are an eclectic mix of private and public companies, manufacturers and service providers, high-tech firms and basic industries. The common factor that links this disparate group is innovation – innovation in the form of novel devices and products, enhanced services and ingenious business models.

    In pursuit of those results, these innovators left the perceived safety of traditional approaches because they understand and accept that risk is necessary for success. Other, equally capable individuals fail to succeed because they fall prey to anxiety and succumb to an endless cycle of analysis paralysis.

    But we should remember that risk and anxiety are two separate conditions, and a simple story will illustrate the point:

    The Surgeon General tells us that cigarettes kill more than 440-thousand Americans each year,1 and automobiles kill more than 30-thousand people per year.2 But, no one seems to be afraid of cigarettes or automobiles.

    However, according to the Deputy Director of the National Institutes of Health, everyone is afraid of sharks.

    It is estimated that there are about 70 shark attacks worldwide each year.3 The National Center for Health Statistics doesn't even keep a record of shark attacks because there are so few. (They know how many people are killed by bee stings, but not by shark bites.)4 The best guess is that sharks kill two or three people each year in the United States.

    But, the fact is that if you went to a crowded beach and shouted "shark" - everyone would race out of the water, jump into a car, light up a cigarette, and drive home!

    That's the difference between anxiety and risk.

    Risk is inherent to innovation, and innovation is fundamental for economic growth.  As Jeremy Seigel, professor of finance at The Wharton School of Business once observed, “Economic growth is based on advances in productivity, and productivity is based on discovery and innovation.”5

    This afternoon I’d like to consider where innovation has taken this nation, how it shapes the present business environment, and the role of innovation in our immediate future.

    Even a cursory review of our nation’s history reveals the breadth of America’s leadership in research and commercialization.

    Americans invented the light bulb, the airplane, credit cards, the integrated circuit and the Internet.

    American ingenuity transformed agriculture with innovations ranging from the self-polishing steel plow and the cotton gin, to the green revolution of the 1960s and 70s and today’s genetically modified crops and livestock.

    Productivity soared by such a scale that the percentage of the U.S. population involved in farming as a living dropped from 50% in 1899, to less than 2% today.

    Even when we aren't inventing something, it seems we Americans are always finding ways to apply the discoveries others have made.

    We didn't discover penicillin, but during World War II Americans figured out how to produce it fast enough and cheap enough to make it available worldwide.

    We didn't invent the internal combustion engine, or the automobile, but Americans perfected the assembly line and mastered mass production with world-changing results.

    When you factor in the discoveries that ushered in the computing and wireless age, the effects are even more breathtaking.

    In 1965 Gordon Moore, a co-founder of Intel, predicted that processing power would double every 18 months, with corresponding price decreases. Moore’s Law, as that prediction came to be known, has taken us from the era of mainframes to PCs to BlackBerrys and now, to iPads.

    Smaller, yet more-powerful computers have enabled innovative companies to introduce networks, linkages among networks, and the Internet. And all of that creates immense new value.

    For example, Mike Ruettgers, former executive chairman of EMC Corporation, noted that the IT industry has demonstrated tenfold-increases in wealth creation at each major stage of its evolution.

    It rose from $80 billion in the mainframe era to $800 billion in the wave of personal computers, to what is now rapidly approaching $8 trillion in the network/Internet era.6

    By leading the way, Americans have carved out a competitive position that has been the envy of other nations for more than a century.

    Yet, the primacy that America has long enjoyed around the world is increasingly challenged by the very same forces of technological innovation that America itself unleashed.

    And, along the way we have brought about an Age of Globalization in which the peoples and markets of the world are moving increasingly toward one another. In this global, Internet-driven economy, the capacity to innovate will dictate economic growth.

    Indeed, as we look around this room, at the examples of so many successful local companies, it is tempting to say that all is well. But a broader perspective paints a very different picture.

    In 2005, a landmark report was compiled to assess America’s ability to compete and prosper in the 21st century world of scientific and technological enterprise.7

    It was developed by a committee of 20 distinguished American CEOs, university presidents, scientists, former government officials and others.

    The committee chair was Norm Augustine, a retired CEO of Lockheed Martin and former Under Secretary of the Army, and someone whom I was privileged to serve with on the President’s Council of Advisors on Science and Technology during the Bush Administration.

    The committee titled the report, “Rising Above the Gathering Storm,” and as you can infer from the title, their assessment was not good.

    Ladies and gentlemen, that was six years ago. In light of the economic, social and technological upheavals of the latter part of the decade, the National Academies called upon Norm to update the report. He did so, and in 2010, the academies released “Rising Above the Gathering Storm, Revisited.”8

    It is a concise, well-documented, sobering work and I recommend it to anyone who cares deeply about the future of this nation. The executive summary concludes with these words:

    “. . . in spite of the efforts of both those in government and the private sector, the outlook for America to compete for quality jobs has further deteriorated over the past five years.

    “The Gathering Storm increasingly appears to be (pause) a Category 5.”9

    The authors point out that “…in the past, citizens of any one nation generally had to compete for jobs with their neighbors living in the same community…in the future they will increasingly be required to compete with individuals who live half-way around the world.”10

    And they offer this example to illustrate just how challenging an environment we now find ourselves in.

    You are presented with two job candidates. Candidate “A” ranks in the lower quartile of his high school class, but he expects to be paid $17 an hour and receive an additional one-third more in benefits. Candidate “B” speaks two languages fluently, ranks near the top of his class, and is eager to work for $1.50 per hour.11

    Which candidate would you hire?

    The Gathering Storm committee concludes that America’s best, and perhaps only hope, to remain a dominant player in the world economy is that old stand-by, the source of our past and future strength, innovation. Listen to their words:

    “We must be first to acquire new knowledge through leading-edge research;

    “We must be first to apply that knowledge to create sought-after products and services, often through world-class engineering;

    “And we must be first to introduce those products and services into the marketplace through extraordinary entrepreneurship.”12

    I believe Northeast Ohio is well positioned to do precisely that. As Tim Ferguson was quoted in Forbes magazine: "In Cleveland('s) heyday, . . . proximity to water or rail mattered a lot. Today, proximity to a university campus matters a lot."13

    In fact, there are 23 four-year universities and colleges in Northeast Ohio,14 and two of them, Case Western Reserve University and The University of Akron, are research institutions.

    These are veritable tool chests of resources and expertise. They can facilitate collaborative impact on a scale that generates innovations and discoveries to re-invigorate our regional economy.

    Over the last decade, The University of Akron has evolved into a convener, developer and anchor for clusters of innovation.  We are growing a regional innovation ecosystem that involves many partners – not only from industry, business and government, but also from academia, community groups, school systems and other stakeholders.

    We have gone far beyond the traditional two tools of technology transfer – licensing and the occasional business start-up – to create a robust, broad-based economic development platform far more powerful than that of any chamber of commerce, anywhere.

    In 2001 we created The University of Akron Research Foundation, or UARF for short.

    This boundary-spanning organization has yielded more than 115 active industry-sponsored research agreements; more than 40 start-up companies; a 500-member ARCHAngels investment network that has generated $75 million in funding; 120 student assistantships with local businesses; and many other initiatives.

    Not long after we created the UARF, the university entered into a partnership with the city of Akron, Summa Health System, and a community group known as the University Park Development Corporation. The goal was to revive a 50-block, mixed-use neighborhood surrounding the campus.

    The University Park Alliance, or UPA, was launched in 2001 with a $2.5 million grant from the John S. and James L. Knight Foundation. In the years that followed, the Knight Foundation raised its support with an additional $10 million grant. More partners, including two additional health care systems, joined UPA.

    Today, total investments by all partners in the University Park area are estimated at about $300 million.

    But perhaps our most significant, multi-partner initiative may be our most recent. Just three years ago, we co-founded the Austen BioInnovation Institute in Akron. It is a major biomaterials and biomedical collaboration among three major health care systems, a research university and a medical college.

    It was backed by an initial five-year, $80 million investment fund, with the promise of an additional $120 million in investments.

    The institute builds upon the University’s expertise in materials science – polymers in particular – to move aggressively into biopolymers and biomaterials. That, in combination with the clinical orthopedic excellence of our partner hospitals, will move the institute toward a leadership role in biomaterials and biomedicine.

    The institute also seeks to leverage regional strengths in education, commercialization and intellectual-property protection.

    It has an ambitious 10-year plan to generate:

    • $150 million in annual academic and clinical research;
    • $50 million in annual commercialization investments;
    • and 2,400 new jobs.

    These three major initiatives – the UARF, UPA and ABIA – go well beyond the traditional avenues of university-driven economic development.

    But our business model includes much more.

    We also have transformed our own environment with The New Landscape for Learning campus renovation program.

    Since 2000 we have completed 20 new buildings and 18 major additions or renovations; added 34 acres of new green space; and expanded the campus’ building area by almost 50 percent to 7.7 million square feet.

    During this same period, enrollment at The University of Akron soared 28 percent to nearly 30-thousand students, a percentage increase well ahead of many other public four-year universities in Ohio. But that is not all.

    In 2007 we established the Innovation Alliance with Lorain County Community College to create a corridor of educational efficiency, knowledge creation and economic development in Northeast Ohio.

    Our shared services initiative for information technology support have become a model among Ohio universities, and prompted a recent statewide study by Accenture to expand this model to other universities.

    Last year, at the behest of the private and public sectors, we launched the Corrosion and Reliability Engineering program. We are creating an applied research network and developing the nation’s first undergraduate degree in corrosion engineering. The Department of Defense has provided more than $8 million to advance this program, which also has drawn direct financial support from BP, RPM International and other companies. In addition, The Sherwin-Williams Company and Nordson Corporation have expressed interest in employee participation to supplement student education.

    This corrosion reliability program is an up-and-comer, and you’ll hear more about it soon.

    Finally, our Northeast Ohio innovation ecosystem seeks to lay the groundwork for truly long-term gains, as well as near-term results. 

    A prime example is our participation in the National Inventors Hall of Fame School…Center for STEM Learning. This middle school emphasizes science, technology, engineering and mathematics throughout its curriculum.

    It was several years in the making, and there is an important fact you must keep in mind to appreciate the significance of this school.

    It is not selective – they did not handpick the best and brightest.

    These fifth- and six-graders were chosen at random from the hundreds of applications submitted by parents throughout the Akron Public School system.

    In its first year, the STEM middle school ranked as one of Akron’s top three schools based on test scores. Newsweek magazine featured the STEM middle school as an example of how problem-based learning can achieve mandated academic standards and more.

    We also are aware that the educational continuum spans our entire lifetime. That is why on April 25-26, we will co-host a National Academy of Sciences Symposium on “Building the Ohio Innovation Economy” at the Intercontinental Hotel in Cleveland.

    In their latest book, “Macrowikinomics: Rebooting Business and the World,” authors Don Tapscott and Anthony Williams suggest that, “The 21st century university should be a network and an ecosystem, not (an ivory) tower.”15

    As I have just explained, an innovation ecosystem is what we are creating in Akron – but Akron must be merely the start. All of Northeast Ohio can and must be a vast innovation ecosystem, if we hope to succeed in the global economy.

    So let us review. We have noted that innovation has produced waves of prosperity for our nation, from its agricultural roots to today’s Internet age.

    Innovation has created new international markets, and formidable competitors as well.

    And innovation still shines as our most certain hope for success in the future.

    It is in this final point that I find our best cause for optimism.

    Look around you. Observe the people and companies being honored today. There can be no doubt that the qualities of courage, creativity and pure, raw ingenuity can be found in abundance in Northeast Ohio.

    So, let us be cheerful and plunge ahead.

    Thank you.

     

    References

    1. U.S. Department of Health and Human Services: How Tobacco Smoke Causes Disease. A Report of the Surgeon General.  http://www.surgeongeneral.gov/library/tobaccosmoke/report/full_report.pdf

    2. National Highway Traffic Safety Administration. http://www-fars.nhtsa.dot.gov/Main/index.aspx 

    3. Florida Museum of Natural History, University of Florida. International Shark Attack File 2007 Worldwide Shark Attack Summary. http://www.flmnh.ufl.edu/fish/sharks/statistics/2007attacksummary.htm

    4. Centers for Disease Control and Prevention, National Center for Health Statistics/NIOSH Workplace Safety and Health Topics: Insects and Scorpions http://www.cdc.gov/niosh/topics/insects/

    5. The Shape of Things to Come, Newsweek, April 8, 2010. http://www.newsweek.com/2010/04/08/the-shape-of-things-to-come.html

    6. Ruettgers, Mike. (2000, October 31). Information infrastructure: The new business accelerator. Presented at the workshop, Transitioning Into the New Economy, Cleveland, Ohio.

    7. National Academy of Sciences, National Academy of Engineering, and Institute of Medicine of the National Academies, Rising Above The Gathering Storm, (February 2006 Edition). Washington D.C.: National Academies Press. p. ES-1

    8. National Academy of Sciences, National Academy of Engineering, and Institute of Medicine of the National Academies, (2010) Rising Above The Gathering Storm, Revisited  Washington D.C.: National Academies Press. pp. ix-xi

    9. (National Academies, Ibid, p.5)

    10. (National Academies, Ibid, p. 18)

    11. (National Academies, Ibid, p. 63)

    12. (National Academies, Ibid, p. 43)

    13. Ferguson, Tim, Forbes, (1999, May 31)

    14. ClevelandPlusBusiness.com. http://www.clevelandplusbusiness.com/Data-Library/Higher-Education.aspx

    15. Tapscott, Don & Williams, Anthony D. (2010). Macrowikinomics: Rebooting Business and the World.  New York: Penguin Group (USA) Inc.

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