Techno-fetish Irish Innovation Policy is Wrong-Headed

Dick Ahlstrom argues in last week’s innovation magazine in the Irish Times that

there is no doubt that a smart economy will bring with it jobs and wealth. It works in big, innovation-driven countries like the US and Japan, but also in smaller places like Finland and Singapore. It seems that, if you invest consistently and wisely in research, then you will benefit. When it comes to the knowledge economy, ‘if you build it, they will come’

This statement encapsulates the blind faith that the Irish scientific community has developed in terms of the huge gamble the Irish government is taking in funding science-push innovation from Ireland’s third-level sector.

This faith is not based on evidence and is reflected in the backslapping First Report on the Strategy for Science, Technology and Innovation published by the Department of Enterprise, Trade and Employment in mid-December.

The report suggests Ireland is becoming more innovative as we are now spending more on R&D, employing more researchers and have more PhD students and graduates. These are all measures of the input to research, not measures of its output or success. Have we not learned at least from our approach to health care that throwing money at issues does not necessarily mean better outcomes?

Even the output measures in the report – patents and licenses vested in the universities – do not suggest a successful outcome to the state’s gamble. The reports states that in 2007 there were 9 licences per €100m spend and 2.6 start-ups per €100m spend. It may reasonably be expected that this will grow in coming years, though of course not all of these licenses and start-ups will succeed.

It is not, as Mr Ahlstrom suggests, cynical to question whether this is a good return to public spending but rather it is correct to point out that the government is involved in a significant gamble that one of these start-ups will succeed. The cost per job threatens to be enormous.

The stance of the government and the scientific community displays a fundamental lack of understanding of innovation. Innovation is a business phenomenon, not a scientific one. The knowledge needed for business innovation is not necessarily, or even frequently, scientific knowledge. Rather it is knowledge of the market place.

While there may be instances where technological breakthroughs have led to new products, this is by no means typical or even usual. Innovation must always involve learning in a market and exploiting opportunities for profit in a market place by developing a new product or process.

It is very unclear how this type of knowledge, the type that really matters for innovation, is enhanced by funding research in universities that is far from the market and which results in patents or licences vested in those universities. It is almost needless to say that universities have no proven track record as entrepreneurial institutions that can fully exploit the patents and licences they develop.

There is diminishing international support for the approach adopted in Ireland. The science-push, techno-fetishist model adopted and funded at staggering levels is no longer viewed in business and economics literatures as an appropriate approach to improving business innovation and competitiveness.

However, Mr Ahlstrom implies that the science-push approach is critical when he says

the Government is doing its part by stumping up the cash, most recently a €300 million funding round under Cycle 5 of the Higher Education Authority’s Programme for Research in Third-Level Institutions. Bidding opened in mid-January and winning applicants are expected to attract additional money from private sector companies, who put up €1 for every €2 provided by the Exchequer.

This money comes as part of the wider Strategy for Science Technology and Innovation, which, in the seven years up to 2013, will see €8.2 billion invested in scientific research.

But can we do it? Can we pull this thing off? Can we grow a smart economy and start creating wealth using our collective brain power rather than brawn, or by screwing together computers designed by someone else?
Of course we can, provided we believe and provided we maintain the funding.

If national innovation and competitiveness were a function only of more R&D spending then those countries with the highest spending on R&D would be the most successful.

In his recent book, The Venturesome Economy, Professor Amar Bhidé of Columbia University argues that trying to maintain the U.S. lead in innovation by subsidizing more research or training more scientists will do more harm than good. Professor Bhidé argues that it is entrepreneurs, managers, financiers, salesmen, consumers, and not just a few brilliant scientists and engineers, that will keep the U.S. to the fore in innovation. I recommend this book to relevant ministers and our science community before more of our diminishing money is staked on this high-risk gamble that is Irish innovation policy.

So is there a better policy? Our universities have served us very well in their traditional roles of producing highly skilled graduates and disseminating knowledge through publication and teaching. The government’s funding of scientific research has come at the expense of these traditional roles of universities. We require a skilled workforce that can identify and exploit opportunities for commercial success irrespective of where the knowledge originates.

This means we need a third-level sector that produces creative entrepreneurs, managers, financiers, salesmen and consumers, as well as engineers and scientists. This requires more resources for teaching across the entire third-level sector. Universities’ ability to continue to contribute in this way is almost fully undermined now by the persistent underfunding of university teaching. This should be the focus of government policy for enhancing business competitiveness and innovation.

I am not hopeful however that the tide can be turned by the science community, who have the unquestioning ear of government. Upton Sinclair correctly observed that it is impossible to make a man understand something when his livelihood depends on him not understanding.