Keeping Research and Leadership at Home

Nine leaders offer their opinions on what the U.S. should do to hold onto its braintrust and stay on the cutting edge of innovation

Can the U.S. maintain its edge? If so, how? Nine leaders offer their answers.

by Vivek Wadhwa

Globalization is reality. U.S. businesses see tremendous opportunities abroad and will increasingly locate their operations closer to growth markets. They will also outsource engineering jobs to reduce costs and move their research functions closer to their offshore development sites. It is not clear what the long-term impact of this trend will be, but what is clear is that at stake is the U.S. standard of living and world economic leadership.

In a previous column, I wrote about globalization research that my students and I had completed at Duke University (see BusinessWeek.com, 11/7/06, "The Real Problem with Outsourcing").

Our research showed corporations saw great advantages in offshoring. They saved money on salaries and overhead, were able to create 24/7 development cycles, and gained access to new markets and customers. They weren't going abroad because of a shortage of engineers in the U.S. or deficiencies in the U.S. workforce, they were simply doing what gave them an economic and competitive advantage.

Postcards for the Edge

The risk with this is that the next jobs likely to be outsourced are in research and design, and the U.S. will lose its ability to "invent" the next big technologies. We may already have lost our edge in telecom—University of Texas professor Ted Rappaport's research shows that all but five of the 57 major telecom research initiatives over the past few years were located outside the U.S. He believes that as a result, U.S. students have lost interest in entering graduate school to pursue research in the telecom field.

Cisco's (CSCO) recent announcement that it would move 20% of its senior managers from Silicon Valley to Bangalore by 2010 shows the trend is accelerating. So, what can the U.S. do to keep its edge? We asked nine business experts what they believe the U.S. should do to keep research at home so that the next technology discovery is made here, rather than in the countries that are building a core competence because of our outsourcing.

Intel (INTC) Chairman Craig Barrett believes we have already lost the race in primary and secondary education. We are losing our position as a top educator of science, technology, engineering, and math students. We are losing our lead in university research, and we have "our head in the sand on government policy."

Education for All

Barrett, Sun (SUNW) Chairman and Co-founder Scott McNealy, IBM (IBM) Executive Vice-President of Innovation and Technology Nick Donofrio, Microsoft (MSFT), Senior Vice-President of Research Rick Rashid, and former MIT President and President-elect of the National Academy of Engineering Charles Vest stress the need to improve K-12 education, encourage students to study more math and engineering, bring in the best and brightest talent from around the world, and up the ante in basic research. Each person has a unique perspective, but all agree on what must be done.

McNealy also says we should "open-source education"—let everyone, everywhere, learn as much as they want, as fast as they want, about any subject they'd like.

Yet CNN anchor Lou Dobbs predicts utter disaster for our middle class and says that Corporate America has chosen to put our middle-class workers into direct competition with the cheapest labor in the world. He says CEOs have to be talking about how to drive innovation in the U.S. and find a conscience, or Washington will have to adjust public policy.

Motivated Workforce

Ralph Wyndrum, president of the Institute of Electrical and Electronics Engineers (IEEE-USA), looks at the problem from the perspective of U.S. engineers and worries about the manufacturing sector being outsourced and taking engineering design and R&D with it. He says engineers must hone their competitive edge through continuing education to keep pace with changing technology by focusing on productivity, innovation, and entrepreneurship.

Rockefeller Foundation President Judith Rodin believes a highly motivated, productive workforce confident in, and committed to, employer success is crucial to U.S. competitiveness. She believes that the solution starts with the workers who make the U.S. what it is. She prescribes a comprehensive look at Social Security, private retirement savings, and health care.

Sycamore Networks (SCMR) Co-Founder and Chairman Gururaj "Desh" Deshpande believes that the $200 billion the U.S. spends yearly in research isn't spent effectively. He says innovations happen in a vacuum, so he donated $20 million to MIT to change the way research is commercialized by bringing academics and entrepreneurs together.

Can the U.S. maintain its edge? If so, how? Edited excerpts of each of the nine leaders' answers follow.

Scott McNealy, Sun Chairman and Co-founder

Here's a good first step: Lift the cap on H1B visas. The current policy in the U.S. is flatline thinking. Talk about a barrier to entry—literally. The 60,000 visas the government offers each year is an arbitrary number and is long-depleted before the government's fiscal year even begins. Imagine if Vinod Khosla and Sergei Brin had not been able to stay in this country. No Sun, no Google. Fewer jobs in Silicon Valley, and a heck of a lot less taxpayer dollars for Uncle Sam.

Here's another idea: Open-source education. People always ask me how we can get our kids interested in math and science; how we're going to develop the engineers of tomorrow. There's a surprisingly simple answer: share. Why not open-source education and let anyone, anywhere learn as much as they want, as fast as they want, about any subject they'd like.

They'd find out what they're good at (maybe it's math, maybe it's science, maybe it's economics), and we could get them into the workforce sooner. They could work at solving some of the biggest problems, like finding the cure for bird flu. This is beyond No Child Left Behind: It's no child, parent or teacher held back.