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Creating Our Future By Inventing It

  • Date: 01/25/2012
  • Author: Dr. Luis M. Proenza (President, The University of Akron)
  • Location: Richfield Chamber of Commerce, Tavern of Richfield
  • Thank you, Jim, for that kind introduction, and for the invitation to join you this evening.

    Before we begin, I would also like extend my personal thanks to several individuals who made time in their busy schedules to join us, including:

    • State Representative Lynn Slaby, and his wife Marilyn, herself a former state representative
    • Bobbie Beshara, the current Mayor of Richfield Village
    • Mike Lyons and Ralph Waszak, former mayors of Richfield
    • Judge Randolph Baxter, retired Federal Bankruptcy Judge
    • Michael Wheeler, president of Richfield Village Council
    • Randy Boroff, Revere Schools Superintendent
    • My colleague from the University, Mr. Clifford Isroff
    • James Biggar, former Trustee at Kent State University
    • And all the members of the Richfield Chamber of Commerce.

    Thank you all for coming tonight, particularly in weather that is less than optimal.

    And I guarantee you will not have the experience of the Rotarian who went to a banquet, and upon his arrival home that evening, was asked by his wife, “Who spoke at the meeting tonight.”

    “The university’s president,” he replied.

    “Great,” said the man’s wife. “Well, what did he talk about?”

    The Rotarian thought for a moment and replied, “I don’t know. He didn’t say.”

    So let me be clear: this evening I want to share with you some perspectives on the Energy of Innovation. First by reviewing how innovation has created the prosperity that our nation enjoys, then by urging us to understand why innovation is so important today, and finally by explaining some of the ways that The University of Akron is creating the energy of innovation to promote economic development right here in Northeast Ohio.

    Alan Kay, a pioneer in the field of computer technology, once said, “The best way to predict the future is to invent it.”[1] Indeed, even a cursory review of the history of the United States reveals the role that research and commercialization have played in building America’s global economic leadership.

    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 today’s genetically modified crops and livestock. Agricultural 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. And by the way, that’s exactly the same thing that’s happening in manufacturing...but more about that later.

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

    We didn't discover penicillin, the Brits did. But during World War II Americans figured out how to produce it fast enough and cheap enough to make it available globally.

    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. That prediction, which has come to be known as Moore’s Law, has taken us from the era of mainframes to PCs to what are today’s BlackBerrys and now iPads. And we still can’t see the end of that progression.

    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, at the dawn of the 21st century, we find that the primacy that the United States has long enjoyed around the world is increasingly being challenged by the very same forces of technological innovation that America itself unleashed.

    In this vast, information-driven economy, the capacity to innovate and commercialize dictates economic growth. And in case you haven’t been paying attention, other nations have learned how to play this game, very, very well.

     “…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.”[2]

    Or, as Thomas Friedman wrote in his column in this morning’s New York Times, “In the past, workers with average skills, doing an average job, could earn an average lifestyle. But today, average is officially over.[3]

    Here, I am reminded of the story of two corporate executives flying across the ocean in the first-class cabin. As they begin to relax, and one says to the other, “You know, I’ve finally figured out what this global economy is all about.” His companion says, “Well tell me, I’m still working on that myself.” The first executive says, “It means I’m finally going to get paid for what I’m worth. And I’m scared to death about that!”

    Since the time of the Luddites - those 19th century English textile workers who took to smashing mechanized looms for fear of losing their jobs - people and politicians have feared the loss of their jobs when innovation destroys trailing edge jobs. Of course loss of jobs is no laughing matter, but as Tom Friedman quipped, “if horses could have voted, there would never have been cars.”[4]

    What is missing from the current debate is the historical understanding and appreciation of ". . . the social and political tumult caused by America's dynamism. The rise and fall of industries and regions, the convulsions that attended industrialization and mass immigration, the revolution in values catalyzed by widespread affluence, (and) the never-ending struggle over dividing the pie . . .” all of these and more have their counterparts in today's economy and will surely be evident as technological innovation unfolds in the decades and centuries ahead.[5]

    The fact is that "industry structures are in constant churn - firms are merging, acquiring, leaving, dying, entering, growing, downsizing, outsourcing and spinning off. At a faster and faster pace, the U.S. economy is experiencing the phenomenon the economist Joseph Schumpeter called ‘creative destruction'..."[6]

    Indeed, I have yet to meet an economy that grows without adding new jobs at its leading edge while also destroying old jobs at its trailing edge. And so, rather than crying “Foul!” we must be willing to tell the truth and encourage displaced workers to acquire the new skills required by newly created industries.

    What does this challenge mean for us? It means that we must become much more effective at managing the talent supply pipeline, we must resolutely dismiss all calls for protectionism, and we must do what Americans always have done best: innovate!

    Jeremy Seigel, a 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.” [7]

    In fact, nearly every economist agrees that the creation of new technological knowledge through research is our most direct economic avenue for acquiring added value.

    They understand that when new knowledge is quantified in a market environment, it creates fuller employment, capital formation, growing profits, and surpluses for reinvestment.

    Put more simply, research begets new companies, which beget new jobs, which beget economic expansions and ultimately the creation of new wealth.

    Or, in an even more basic analogy to that of the birds and the bees: sex is to babies as research & development are to new wealth creation.

    Conception is the common element.

    My friends, I believe most of us have never learned this economic version of the birds and the bees, because it seems that most of us have no idea how new wealth is created.

    Far too often, people in government and business behave as though the only avenue for economic development is to lure away the business assets of other communities through tax breaks and other incentives. The philosophy is “go someplace else, steal their cookies, bring them back and forget about it.”

    Sure, that approach adds some measure of short-term economic activity to your community…that is, until someone else plunders your cookie jar. Ultimately the result is a zero-sum game.

    Now perhaps some of you are thinking, “OK, Proenza, innovation is important to your big research university, and maybe to the manufacturing or pharmaceutical sectors, but it doesn’t really apply to those of us in the retail, financial, insurance or other service industries.”

    Yes it does, and I’ll share with you some recent data that helps to explain how.

    Just one month ago, on the 25th anniversary of the Council on Competitiveness, on whose executive committee I sit, issued a report titled, “Make: An American Manufacturing Movement.” I am pleased to tell you that some of the recommendations of the report – not enough if you ask me – were reflected in the President’s speech last night and were the subject of a press conference this morning.

    The report says that “U.S. manufacturing is more important than ever, employing more than 11 million Americans directly, and creating close to 7 million additional jobs in related industries.[8]

    Manufacturers contributed $1.7 trillion to the U.S. economy in 2010…(and manufacturing) has the highest multiplier effect among economic sectors, pays higher wages and drives innovation.”[9]

    But many of us have an outdated view of manufacturing, so a vital first step is to readjust our attitudes toward manufacturing. “The image of manufacturing as dumb, dirty, dangerous and disappearing is far from accurate. Today, manufacturing is smart, safe, sustainable and surging.”[10]

    That’s a refreshing change, isn’t it, to hear the word “surging” used in conjunction with American manufacturing? In fact, this past weekend the Akron Beacon Journal reported that manufacturing was one of Ohio’s rare bright spots in an otherwise gloomy employment report for November/December. The newspaper reported that while service sector jobs fell by 1,200 and the non-manufacturing goods industries lost 2,100 workers, manufacturing jobs rose by 600 in that same period.[11]

    Now, we must also face the reality that America’s current manufacturing environment is highly complex and confronted by many challenges. Chief among them is the conundrum that as manufacturing productivity and output rise, employment declines because fewer workers can produce more goods and no politician can save jobs that no longer exist.

    However, every historical lesson tells us that, whether in textiles or in agriculture, productivity growth ultimately leads to further innovation, wealth creation and the eventual rise of entirely new industries, which create many more jobs – but not necessarily in the same industry that shed them – and those new jobs always require a totally different set of skills

    I believe the facts are inescapable. If we want a stronger economy, we must place innovation at the center of our national strategy.

    And that, ladies and gentlemen, is precisely what we are doing at The University of Akron. We understand that in the 21st century, universities must produce the energy of innovation that fuels economic development.

    So allow me just a few more minutes to share with you how we are creating that energy of innovation.

    We have moved beyond the traditional tools for licensing and commercialization – to create a very broad-based and robust platform, or “tool-chest” for economic development, and a place where you can dream and dare and do what it takes to change the world.

    We began that journey in 2001 by creating The University of Akron Research Foundation, or UARF for short. We have placed it as the core element in our economic development tool chest.

    This organization links industry to the University, supports entrepreneurial activities and expands existing industries. It stimulates new economic growth by commercializing technologies generated by industry as well as within the university.

    Perhaps you have heard of another of our major collaborative initiatives, the Austen BioInnovation Institute in Akron. It was launched in 2008, through a partnership with three area hospitals and a medical school, to establish Akron as one of the world’s leading centers for the application of biomaterials in medicine, particularly in orthopedic and wound-healing applications; and to do so by leveraging existing strengths in advanced materials, biomaterials science and engineering skills, and the clinical strengths of our partner hospitals. (If the link between polymers and bioscience isn’t clear to you, let me explain. If you take all the water and minerals out of your bodies, the rest of you is polymer extraction, including your DNA. )

    The ABIA has made amazing progress in its three years of existence. In 2010, the ABIA and UARF partnered to win a $1million i6 Challenge Award, one of only six awarded nationally by the U.S. Economic Development Administration.

    And in past two months alone, the institute has signed a memorandum of understanding with the U.S. Food and Drug Administration to assist with the testing and approval of biomaterials; and announced the creation of its first spin-out company.

    Let me tell you a bit about some of our more recent initiatives. Do you recall the pejorative term “Rust belt,” that was applied to much of the Midwest? Well, rust and corrosion are a problem throughout the world, not just in the Midwest and it is a huge drain on economies. Corrosion costs the Department of Defense in excess of $20 billion annually, primarily in the form of equipment that must be decommissioned or simply breaks down. That’s just one department of the federal government and if you include our basic infrastructure, it is estimated that the total cost to our nation is closer to $400 billion. So this clearly is an issue that must be addressed.

    So as it happens, we were approached a few years ago by a local business leader and representatives of the Department of Defense and the National Association of Corrosion Engineers. They asked, “Given your university’s expertise in polymers and engineering, would you consider creating the world’s first baccalaureate degree program in corrosion engineering?” I replied, “We’d be delighted!” And so we have, and in the process received more than $20 million to get the program going.

    Another new and significant initiative is our collaboration with the Timken Company, which wanted to explore an innovative way to continue technical development for one of its business units. So the company signed an open innovation agreement with The University of Akron and provided $5 million to link their researchers to our scientists and engineers, and to establish the Timken Engineering Surfaces Laboratory on our campus. Eventually, this collaboration will result in perhaps one or more spin-out companies, and that is an exciting proposition that is likely to serve as a model for the nation.

    We have many, many other collaborative projects underway, like our $650 million New Landscape for Learning campus enhancement program, or the Innovation Alliance with Lorain County Community College and Stark State College, or The University Park Alliance, created to revitalize the more than 1,000 acres surrounding the campus and linking it to downtown Akron.

    Before I conclude, let me tell you about one last item that I believe will positively affect the citizens of Richfield Village and all of Northeast Ohio.

    Last week, our board of trustees endorsed a new strategic plan for our University entitled Vision 2020: Toward 150 Years of Distinction & A New Gold Standard of University Performance. In it, we outline our plans for bold new initiatives and set firm benchmarks for our university.

    So what does a strategic plan have to do with innovation and economic development? Everything! Because it is built around the three principles of relevance, connectivity and productivity – in other words, we intend to be an even greater positive force for the economic success of our region; we intend to ignite the Energy of Innovation.

    You can examine the details of Vision 2020 for yourself by visiting our website, but by way of a teaser, let me give you a few of the aspirational goals we have set for ourselves:

    By 2020 we intend to:

    • grow enrollment to 40,000
    • achieve a $1 billion development portfolio
    • record $200 million in annual research expenditures
    • and hire 160 new faculty and staff

    Audacious? Maybe. But we know that we can achieve great things because we have achieved great things. And I believe that our past is prologue for a successful and productive future.

    In closing, this evening I have shared with you some thoughts about innovation’s role in creating new wealth. I reviewed some of the ways in which innovation has produced waves of prosperity for America, and how we must anticipate and leverage the process of creative destruction that accompanies all economic progress. I spoke of the vital role manufacturing plays in our national economy, and the equally vital role that innovation must play in that important economic sector right here in Northeast Ohio.

    And finally, I shared with you just a few examples of the types of collaborations and innovations that The University of Akron has undertaken in becoming a broad-based and robust platform for economic development in our community, one that generates the energy of innovation for Northeast Ohio, and a place where you can dream and dare and do what it takes to change the world.

    So, let us be cheerful and plunge ahead.

    Thank you!

    [2] National Academy of Sciences, National Academy of Engineering, and Institute of Medicine of the National Academies. (2010). Rising Above The Gathering Storm, Revisited (ISBN 13: 978-0-309-16097-1, ISBN-10: 0-309-16097-9). Washington D.C.: National Academies Press. p. 1

    [3] Friedman, Thomas. (2012, January 25). Average Is Over. New York Times, http://www.nytimes.com/2012/01/25/opinion/friedman-average-is-over.html

    [4] Friedman, Thomas, Ibid

    [5] Lindsey, Brink. (2004, September 23). The Biggest Rags to Riches Story Ever (Review of “An Empire of Wealth” by John Steele Gordon). The Wall Street Journal, p. D10

    [6] Reamer, Andrew. Icerman, Larry. Youtie, Jan. (2003, August)  "Technology Transfer and Commercialization: Their Role in Economic Development," Georgia Institute of Technology, p. vii

    [7] Roubini, Nouriel. (2010, April 8). The Shape of Things to Come. Newsweek, April 8, 2010. http://www.newsweek.com/2010/04/08/the-shape-of-things-to-come.html

    [8] Council on Competitiveness. (2011, December). Make: An American Manufacturing Movement (U.S. Manufacturing Competitiveness Initiative full report, page 8). Washington, D.C.

    [9] Council on Competitiveness, Ibid.

    [10] Council on Competitiveness, Ibid, p. 5

    [11] Mackinnon, Jim. (2012, January 21). As Jobless Rate Falls in Ohio, It’s Really Bad News. Akron Beacon Journal, pp. A1, A6.


  • Topic Category: Innovation
  • Tags: Innovation manufacturing Akron Model
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