Steve Koonin

How Can We Innovate Better?

April / May 2010 Volume 8 Number 2

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The interview was conducted in Secretary Koonin’s Washington office by Bob Cochnar, Innovation’s editor.

At the ARPA-E Summit [in March] everybody was saying that if we don't double the research and development budget, we're going to be in real trouble. Where are you on that?
I think the R&D budget broadly has declined in relative terms for many years We are not investing enough in basic R&D, which is what the Office of Science does. The administration has a commitment to see us double it within the decade. So we are planning on that basis.

We also seem to be falling behind in competitiveness and innovation.
Oh, I'll say. Look, there's a fundamental problem, which I think is starting to be recognized, but I don't think we have figured out what to do about it. The United States is four and a half percent of the world’s population, 23 percent of the GDP, but the rest of the world is smarter, developing faster, hungrier. And that change in circumstance, which seems to me to be inevitable, is not something that we have really internalized or figured out how to deal with yet.

Well, now, when you say, "we," are we talking about the scientific community or are we talking about a political community?
Both. Not a political community alone, but society as a whole. I think a lot of the mindset of Americans is conditioned by the last century or so dominance—not the right word, but being the biggest guy on the block. And it seems to me that forces are working to change that.

And yet, at the same time, we do everything we can not to compete, it seems to me. For example, by keeping scientists of other countries out of this one.
Science was born as a truly international operation. To put up barriers is, I think any scientist would say, absolutely the wrong thing to do. That said, there are, as you get further down the technology chain, things you necessarily want to hold more closely for proprietary reasons. National security issues, for example. I don't think there's one rule that fits all, but certainly for the very basic science, the whole enterprise and the nation's own interests are best promoted by the free flow of people and ideas.

There was a time, and it wasn't too long ago, where people from other countries came to our universities to learn and they stayed.
Still do.

Well, not as many as they used to.
Right. Some of the CEOs and VCs I’ve spoken with say we should be stapling the green card to every Ph.D. degree in the sciences or engineering. Of course, we should. Historically we have benefitted as a filter by getting the best or most ambitious one percent of the world's population to come here and work or be educated.

So I go back to the question, what do we do about it?
To digress for a second, there are two sustainabilities. There is the big S sustainability, which is about the developing world and how they're going to require more resources as they develop and the great drain on global resources. But then there is the little S sustainability, which is about the U.S., and the sustainability of its position in the world as the rest of the world develops.

So your answer is?
Well, I start by making a list of what are our differential advantages. Our rule of law, intellectual property protection, free flow of capital, the higher education system, the innovation system that combines the labs and the universities.

It sounds as if they’re getting a little creaky, though.
They're getting creaky, you're darn right they are. And that's about as far as I've gotten. You can, as a thought experiment—I would not dare suggest it because I think it's a lousy idea—but you can go back to Fortress America and say, I'm just going to wall off flow of people, flow of goods, flow of capital and ideas, let the rest of the world do whatever it's going to do and we’ll just watch.

It's like Japan in 1850.
Yes. And it'll be a disaster. On the other hand, I don't think we have got a strategy for how to be America in the 21st century.

Do you hear anybody talking about that? Well, maybe people talk about it, but is anybody listening?
No. I was listening last night to the news hour, on PBS. It had Paul Kennedy, who wrote The Decline of Empires. He was starting to make some of these points. It's a difficult subject to talk about. This is America, it's a great country. Of course, we can do anything. I think for people who are maybe not as exposed so much as to what's going on in the rest of the world, it comes as a shock to hear that maybe that's not really true. So we've got a lot of work ahead of us, but the scientist problem solver will say, let us understand the problem first. I think we've made some progress on that. Much harder to understand is what to do about it. And then it’s even harder to actually get it implemented. At the heart of it all is innovation. And so how do we do that better, not just in the energy business, which has got some of its own unique structural problems, but also in other fields—IT, manufacturing and so on.

And yet we have been a nation of innovators in the past.
I think it's in our DNA. Somebody once said the U.S. is one of the few countries that was founded on an idea. We've attracted generations and generations of people who really want to change the world. How do you capture, sustain those advantages in this rapidly globalized world where everything else is starting to catch up? But I don't think we have recognized these circumstances yet.

Don't you think the our current economic travail has something to do with it?
Perhaps. Although it has been a secular trend for a long time. You know, if you look at the jobs numbers. We started losing manufacturing jobs in this country a decade ago. And yes, it's been exacerbated by the current problem, but it's been going on for a long time. People talk about restoring manufacturing capability in the U.S., which I think is absolutely essential. But you have to ask why have we lost it. We have lost it because the U.S. is not a favored venue anymore for mass manufacturing. And maybe for high tech—that’s what we're hearing. Maybe it is cost of labor. You can build a factory in Singapore and not have to pay taxes for 20 years. We don't do that sort of thing. And then there are other regulations beyond the financial realm.

We have always said that the jobs are created by small business. And the small businesses nowadays are very often startups, tech businesses. So this segues into our concern about technology transfer. Until recently there were no champions for technology transfer at the Department of Energy.
Tech transfer is very high on Secretary Chu’s agenda, formed by his experiences and his leadership at the Lawrence Berkeley Lab.

He did a lot of that there.
That's right. And so that's why we have appointed a separate person who will spend full time, someone who's experienced in this business.

CalTech has done a lot of that [Karina Edmonds, the newly appointed tech transfer coordinator at DOE was a director at the CalTech technology transfer office].
And under my time as provost [at CalTech], we grew a lot of it. But Cal Tech is not unique in that. Stanford, of course, has got a wonderful record.

MIT is not so bad.
MIT is not so bad either. And certainly we consulted with people at all of those universities as we were trying to find this position and asked how can we do better in the Department of Energy. Karina’s job is mostly in the labs. She needs to understand the landscape, identify best practices and then go out and promulgate them. The Secretary is a big fan of putting incentives in for the labs.

Right now, for tech transfer there are no incentives. There's no reason for people to want to do it.
Right, right. And I would contrast that with the universities where there are big incentives for not only the university institutionally but also for members of the faculty.

Some labs seem to be more interested in tech transfer than others.
Right. Some labs are, yes. And the other thing of course is we're trying not only incentives but also to make the labs more transparent to the outside.

So things are moving.
Yeah, they are moving. They are moving at a rapid pace for government, as I've discovered.

You were the chief scientist at BP. [In 2007 BP announced a 10-year deal to found the Energy Biosciences Institute on the UC Berkeley campus.]
I think we created something that frankly has been, at least in my mind, a model for how we should be doing rapid commercialization of things in other fields. The biological research centers are something like that. When you sit industry people cheek by jowl with the basic researchers, somebody who is working on plant genomics has a very good sense of the context and the needs of people who are running the biofuel business. I think I can tell this story. This was already two years ago or a year and a half ago. We had the first meeting of the energy biosciences team and the main faculty and senior researchers who were involved with the BP project at Berkeley, and the BP folks. And it was a two-day retreat or something. We brought in from the BP side as a speaker the guy who was then and maybe still is running BP's biofuels business. So this is not a technology guy, but a business guy. He talked for an hour about his vision for the business, what he was doing, the concerns he had. And it was really interesting to watch the academics see someone with a very different kind of intelligence, different motivations. I think it was enlightening. And I assume that good things have flowed from that.

ARPA-E got funded, but not by a whole lot. That's not going to go very far, I don't think.
No. We have initiated what I think is a great program, although, frankly, we have not figured out how to innovate in energy. Energy is different. Other people have recognized. that the system has not really figured out how to innovate rapidly in energy.

Investors are certain they're wanting to.
They want to but we haven't really figured out how. So in my mind we're trying a number of different structures. The base programs, the loan guarantees, all are different pieces that may or may not fit together and may or may not, deliver as much as they promise. We're going to see.

Like throwing stuff against the wall?
Well, no. I would I would go further. I'd say better than that. They are all considered bets, but they are experiments in the sense that no one has ever tried these things before. I think we got ARPA-E off to a great start. So we need to follow through. And hopefully we'll start to see payoff soon.

But as you mentioned just a moment ago, we are dealing with the government here.
We are dealing with the government.

And it goes slow.
It does go slow. On the other hand, the money is slow to emerge, but hopefully the entrepreneurs in the private sectors move along faster once they've got the money.