Strategy. Innovation. Brand.

Government role in innovation

Did The Government Create The iPhone?

Government at its best.

Government at its best.

I’ve enjoyed and admired Apple products since I got my first Macintosh in the mid-1980s. Apple products are intuitive; they’re designed for people rather than technologists. I think of the company as innovative and dynamic.

On the other hand, I often hear that our technology and pharmacy companies would be much more innovative if the government would just get out of the way. Critics claim that governments are meddlesome nuisances.

Not so, argues Mariana Mazzucato in her new book, The Entrepreneurial State. A professor at the University of Sussex, Mazzucato documents the government-funded research that enabled many of the great leaps forward in information technology and pharmaceuticals.

Mazzucato argues that the state is the true innovator, willing to invest in high-risk endeavors that can affect all aspects of society. By contrast, private companies are relatively non-innovative; they simply take the results of governmental research and commercialize them. In Mazzucato’s view, the government bears the risk while private companies take the profits.

In an extended example, Mazzucato analyzes Apple’s iPod, iPad, and iPhone and the technologies they incorporate. She identifies a dozen embedded technologies and traces the origin of each. In each case, the technology originated in government (or government-funded) projects.

Mazzucato documents government investments from around the world.  For instance, we wouldn’t have the iPod if not for German and French investments in giant magnetoresistance (GMR) that enables tiny disk drives. In the United States, the multi-touch screen was developed at the University of Delaware (my alma mater) with funding from the NSF and the CIA.

Mazzucato argues that we do ourselves a disservice by denigrating governments as bumbling meddlers. Private companies invest for the short-term and are relatively risk averse. Governments can look much farther into the future and can accept much less sanguine risk/reward ratios. As I’ve argued before, governments can create fundamental platforms that many entrepreneurs can capitalize on.

Mazzucato struggles with but doesn’t quite resolve the fundamental issue of fairness. Should Apple pay the government back for all the technologies it has capitalized on? One view is that Apple already reimburses the government through taxes. However, the recent ruckus about Apple’s ability to avoid taxes suggests that the reimbursement may not be full or fair. Perhaps Mazzucato can develop a mechanism that will help reimburse governments adequately for fundamental breakthroughs.

As Mazzucato points out, we tend to tell only half the story. We point to the successes of private industry and the failures of the government. If half the story becomes the whole story, we will underfund government research and drive away talented researchers. We won’t take the big risks but only the incremental, short-term risks that private capital can afford. For all of us who love the iPhone, that would be a shame.

(Click here to watch Professor Mazzucato give a TEDx talk).


Sunday Shorts – 5

The next mobile app platform?

The next mobile app platform?

Some interesting things I spotted this week, whether they were published this week or not.

The Economist asks, will we ever again invent anything that’s as useful as the flush toilet? Is the pace of innovation accelerating or decelerating? And what should we do about it, if anything?

When we think about innovation, we often focus on ideas and creativity. How can we generate more good ideas? But what about the emotional component of innovation? For innovative companies, emotional intelligence may trump technical intelligence. Norbert Alter answers your questions from Paris.

We’re familiar with the platform wars for mobile applications. Will Apple’s iOS become the dominant platform? Or maybe it will be Android from Google? Perhaps it’s some version of Windows? But what if the next great mobile app platform is a Ford or a Chevy? (Click here).

For my friends in Sweden, here’s McKinsey’s take on the future of the Swedish economy. Things are looking up — just don’t rest on your laurels.

Where does America’s R&D money go? Here’s an infographic that shows how the Federal government has invested in research over the past 50 years.

The Greeks had lots of tricks for memorizing things. They could hold huge volumes of information in their heads. But does memory matter anymore? After all, you can always Google it, no? William Klemm writes that there are five reasons why tuning up your memory is still important. And he’s a Texas Aggie so he must be right.

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