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Obama's Strategy for American Innovation

Posted by: Helen Walters on September 22, 2009

“Innovation is more important than ever,” declares President Barack Obama in a white paper released yesterday. A Strategy for American Innovation: Driving Towards Sustainable Growth and Quality Jobs doesn’t exactly break new ground, but the 22-page report does present a good snapshot of where we are now.

It doesn’t pull its punches, either. The first few pages provide historical context, painting a bleak picture of American dystopia, an America limping along with a broken economy, a neglected, out-of-date education system, decaying infrastructure (both physical and virtual) and out-of-control health care costs. But read on! The Obama Administration is here to help, and looking not only to avoid unsustainable, bubble-driven growth but also to avoid “unproductive and anachronistic debate” about the government’s future role. “The true choice in innovation is not between government and no government, but about the right type of government involvement in support of innovation,” says the report.

So how does Obama define innovation?

As it happens, pretty straightforwardly: "Fundamentally, innovation is the development of new products, services, and processes." Then this, more interesting: "The greatest job and value creators of the future will be activities, jobs, and even industries that don't exist yet today."

Essentially, there are three steps to Obama's plan, tackling the grassroots to the macro challenges facing the world at large. So, he's talking about investment in basic research, a topic BusinessWeek has written about a lot of late (in particular, see Adrian Slywotzky's essay and this response from Vivek Wadhwa and Robert E Litan. He's talking education: "educate the next generation with 21st century knowledge and skills". He's talking infrastructure, both physical (roads, bridges) and virtual (Internet access.)

And he's talking entrepreneurship, including sponsoring high-tech visas, a topic close to the hearts of many VC's, including Paul Graham of Y Combinator, who's been calling for a Founders' Visa for months now. [I also noted this similar suggestion from Mike Milken back in February.]

What does it all add up to? A snapshot of Obama's commitments to date, with a reminder of his commitments to issues such as energy, healthcare and education. And sure, it all sounds good and it's great that innovation has so much buzz around it at the moment (stay tuned for Reena Jana's report from the Clinton Global Initiative gathering in Manhattan tomorrow, where the topic is also front and center). The commitments are terrific. Now they must be executed. And as we all know, executing an innovative idea effectively is just as hard as coming up with it in the first place.

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Reader Comments


September 22, 2009 10:01 PM

Many of the right sound bites but actions speak louder than words. Bubble-driven growth is caused by government. Russia, China, India, Korea, Cuba.... know all about it. Shortages of what people need and excess of what they don't want. When government policies are incongruent with citizen's needs and wants, bubbles are the consequense(over supply and undersupply) causing huge price exagerations.
This adminstration arrogant enough to sacrifice our freedom's and the incentives for private innovation for it's power.


September 23, 2009 07:53 AM

What Obama is missing is that innovation will only be helpful if the new products will be manufactured in the USA with wages going to American workers.

That's how to "spread the wealth around". We need to make things, not only invent things.

But neither Obama nor his manufacturing czar has a clue how to revive the manufacturing industry. And, they're unlikely to. Obama admitted he's mathematically challenged in his speech in Troy, NY on innovation.

The problem with manufacturing is mathematically-based. It will probably surprise most that one faulty mathematical algorithm caused the demise of the US manufacturing industry.

Go back to school and study calculus, Mr Obama. The answer is not in political power. The answer to reviving the economy will come from fixing the math.

Dale B. Halling

September 23, 2009 11:09 AM

The Obama administration deserve credit for understanding the importance of innovation to our economy. Overall the document outlines a credible strategy for increasing innovation. However, there are attempts to shoehorn President Obama’s current proposal under the theme of innovation. Since 2000 we have passed a number of laws and regulations that are killing innovation in the US. The incredible innovation of the 90s was based on technology start-up companies built on intellectual capital, financial capital, and human capital. All three of the pillars have been under attack since 2000. Our patent laws have been weakened reducing the value of intellectual capital. Sarbanes Oxley has made it impossible to go public reducing financial capital for start-ups and the FASB rules on stock options have made it harder to attract human capital to start-ups. For more information see


September 23, 2009 11:30 AM

Everybody loves innovation but nobody wants to adopt the mindset and behaviors that enable innovation. This country will require innovative approaches to nurturing innovation. Yet we all fall back to our traditional, hidebound points of view, unwilling to consider the possibility that we may be partly, if not completely, wrong in our assumptions. The innovation mindset includes an openness to the possibility that everything we know and believe is wrong...or at least partly wrong. To truly see the 'new' we have to be very skeptical about the 'old'. The Right says that government can't do anything right. The Left says that business is too short-term focused to take care of our future. Perhaps the innovative answer lies somewhere in the middle in a new form of partnership between government and business. Dogma and innovation cannot co-exist.


September 25, 2009 05:06 PM

RJBJr ... Are you a moron or plain ignorant?!

In a free market or democratic economy the president/ prime minister does not dictate who gets the job; this happens only in a socialist or communist economy ... it is entirely based on corporate cost saving direction ... So if you want to talk to someone about creating jobs in US; talk to the CEOs.

Obama wants to impose a surcharge for offshoring. This is an aggressive move IMO but at least he is creating a policy to reverse the trend. In reality, i don't think it will but at least will provide an income to sustain the internal expenses incurred on US citizens ...

Know your country first!

David Taubmann

October 19, 2009 10:35 PM

I totally DON'T agree with the last sentence.


October 28, 2009 07:15 AM

Innovation is good actually,the world is watching obama's plann,as he has been abeacon of hope to the world.His stength to influence the Republican will matter alot to his implementation of the stated vision.

George Keremedjiev

October 29, 2009 11:53 AM

The need for domestic manufacturing should not be solely an issue of jobs. The greatest of the 20th century American innovations was the corporate three legged stool of innovation (R&D), engineering and manufacturing. One of the best examples was the original AT&T with its innovation & engineering via Bell Laboratories and its manufacturing arm, Western Electric. Likewise, Thomas Edison and his staffs innovated in his laboratories but Edison’s manufacturing arm, General Electric supplied the engineering and manufacturing skill sets to bring the ideas into practical fruition. Nothing comes close to the product improvement feedback loop that manufacturing offers to those who engineer and innovate. The Internet is not the equivalent of an inventor/innovator being close enough to walk or drive to the engineering and manufacturing facilities. Today in the 21st century we want innovation in the USA but are happy to outsource the engineering and manufacturing to the rest of the world. Innovative, creative and aggressive marketing is no substitute for engineering and manufacturing. We need to re-visit the basics of our past - the very basics that our overseas industrialized competitors have fully embraced.


November 8, 2009 12:33 PM

How about repairing the damage we've done to our planet. That might create some jobs. Let's reforest our planet.There is a lot of unused stripped land that could become lush forests,cleaning our atmosephere of co-2 and creating more oxygen. Do you realize the whole eastern U.S. was a giant forest? The rain forests of Brazil are disappearing But ours is already gone.


November 8, 2009 07:42 PM

Deloitte has published an study in Spain about the efficiency of R&D investment (return on investment in R&D) with a surprising result:

1/ Germany and Italy are among the most efficient R&D investor, with more return from their investment.

2/ The U.K. and Japan are in the middle.

3/ The U.S., France and Spain are among the less efficient nations.

If we add the American giant bureaucracy at a federal and state level, plus 2 million people in jail, the American taxpayer is logical to get some angry. America is very much unefficient.


November 11, 2009 02:53 AM

In a word , all of planning are great , great & great. Finally Great for great!!!!!!!!!!


November 23, 2009 06:34 PM

Murphy says: "Bubble-driven growth is caused by government." Nonsense. Government involvement had nothing to do with the high tech bubble. The Asian economic bubble that popped in Japan in the 90's. And, it had virtually nothing to do with the recent real estate bubble. Free market ideologues have blinders on and seek to re-write history to show that the laissez faire policies that they have been advocating for so long were NOT the culprit. Well, sorry to burst your bubble, Murphy, but you are dead wrong!

Unregulated free markets OFTEN lead to unchecked market speculation and "bubbles" without any help from big brother gov't. Libertarian free marketeers want people to believe that gov't programs that promoted mortgage lending in poor neighborhoods led to the collapse of the US housing market. Nonsense! Their impact on the US real estate bubble was minimal. No gov't policy caused unregulated securities firms to create "credit default swaps". Lack of regulation is what caused the bubble NOT too much gov't intervention. Laissez faire policies allowed fly-by-night mortgage brokers to deal bad loans and then sell them off to private hedge funds and get rich before all the red ink hit the fan.

Market speculation, criminal activity, and shady accounting causes bubbles NOT gov't intervention. Temporary surplusses or shortages caused by gov't intervention is NOT anything like an investment bubble. So, comparing last year's market collapse to Russia or Cuba is absurd.

If the gov't had intervened MORE - to regulate the hedge funds, ban credit default swaps, and lock up the criminals, then the bubble never would have happened or at least the contagion would have been cointain in one sector, real estate, rather the spreading throughout the global banking system.

But, sadly, laissez faire idiots paid lobbyists to pay off politicians to re-write regulations and under-fund gov't oversight, which caused a lack of gov't involvement in the market - which allowed Wall St. criminals to run rampant.

More regulation is the solution - just like more cops is the solution to high crime. The "gov't involvement is the problem" mantra is what got us in the current mess! Underfund the cops and the criminals will rule the street.

Obama is trying to do the right thing. But, some free market nuts (like Murphy) sadly still haven't learned the lesson of the current economic collapse. Left to the their own devices, free markets will eat themselves. It's like a football game without any refs, eventually the cheaters will rule the field, and at that point free and fair "competition" becomes a bad joke.


December 13, 2009 05:23 AM

I think the whole thing advising clients to bring manufacturing jobs outside of the US is a legal angle to law conspiracy. Finished goods are not made with US standards, despite the $100.00 difference; companies would rather save that that much than pay a little bit more just to show profit to the stockholders! (Even if it’s just half a percent?) Stop to think for a moment, anyone notice that the same lawyer is approached again as we get blamed for injuries on strict liability issues? Just to think, the 6th element was suddenly brought to our attention bringing us to answer punitive damages? Just think who could have known of such things? Discovery finds such things as one ingredient that we did not check off and we suddenly get dinged on prior knowledge? For this to go away, we hire the same lawyer this time have him make the lawsuit go away! Ever wondered how they make money? It’s most likely they saw you as a qualified buyer!!! (The perfect buyer playing you on both sides of their services…)

Lee Welter

December 27, 2009 02:27 PM

"Dispose of radioactive wastes and toxic chemicals quickly, inexpensively, and safely." ??

Will this eliminate fluoridation of drinking water (which "disposes of" industrial waste)?

Bryan Allen Smith III

December 31, 2009 09:33 AM

I enjoy that he looks as challenges like this as tasks that can in there own way be a solution for other the economy.

It has always been true that in order to succeed you have to "Find a need and fill it" or in other words "find a problem and fix it"

I'm looking forward to seeing these things being tackled


January 4, 2010 07:54 AM

I would like to know what has the past three US Presidents done their first year in office? America must remember all first year Presidents inherit a mess that needs to be cleaned up before their plan can take effect. President Obama is no different. We as American s are not being fair to judge him so fast. Keep in mind that Congress, the House, and the Senate also play a big part in the decision making for this country.

Abinash sahoo

February 8, 2010 01:52 PM

A great hope from obama , we have expected to balance the whole system.


February 19, 2010 08:59 PM

Not bad ideas and we do need to innovate. For the past ten years or so all we have done is send things to places unregulated so they can be made cheaply and we have encouraged people to create pyramid schemes and other wealth mirages.

Shahid Chowdhury

March 6, 2010 07:20 PM

Barak Hussein Obama is completely surrouded by ill-motivated cogressmen and some vested quarters.He can not break this vicious circle because he put some staff members around him those who are against his policy.So his slogan/statement of change is nothing but a eye-wash for the mass people of the US and around the globe.His country has no money to buy any thing from the outside world.The US is indebted to Japan about $769 billion and $750 to China. His Fiat money is worthless paper to foreign countries.He is a war monger nobel winner. This prize is politically motivated; he is not a peace loving person. His army is still killing people in Iraq, Afghanistan,Palestine,Somalia, Yemen and so on. Still in the US,people are losing their jobs,unployment rate is still high. I think there is no hope for the US. Please change your foreign policy and concentrate on your home problems and don't be led by neocon and AIPAC.


April 14, 2010 09:16 AM

Obama is obviously quite ignorant of the negative consequences when government attempts to pick winners and losers. Take a look, for example, at Japan's subsidy to develop high-def television. They invested about a half billion dollars in the project during the 90s only to find that the technology was obsolete. Japan has been on a downward spiral ever since.


April 20, 2010 06:15 AM


You need to learn to spell. When you accomplish that you should realize that you live in the world created by America. Everything you see, smell, feel, and touch in this modern world was created by the people you are preaching to you pedantic fu%k. By the way, I agree with your last sentence.

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What comes next? The BusinessWeek Innovation and Design team of Michael Arndt and Helen Walters chronicle new tools for creativity and collaboration, innovation case studies in both the corporate and social sectors, and the new ideas that have the power to change the way things have always been done.

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