The Case for Revitalizing U.S. Industrial Innovation

America is the most innovative country in the world, right?

There’s no question that America is innovative. From the era of industrial innovation that fueled the rise of the American middle class, to the success of companies like Uber, Amazon, Apple, and Microsoft, you only need to look at numerous success stories to see that’s true.

American innovation has pioneered inventions, powered technologies, and fueled software and services (not to mention the stock market) extremely well for decades.

Today, America does a tremendous amount of research in everything from quantum physics to advanced telecommunications. But despite the wealth of intellectual property developed by American innovators, we find ourselves in the midst of a great power competition with technologically peer adversaries like China and Russia. The United States is losing ground in critical technology areas, leaving our supply chains vulnerable and our national security at risk.

There are several facets to this problem. We are quite rightly concerned about how much of our intellectual property (IP) is stolen, particularly by China. Fighting cyber-theft of American IP is a vital goal for us at MITRE Labs. But even with that said, it’s important to recognize that stolen IP isn’t the only reason China has gained ground in vitally important domains such as telecommunications, lunar landings, and artificial intelligence.

Let’s be clear-eyed that China picked up the slack that the U.S. left available. China’s top-down strategy of investing in industrial innovation has served them well for more than a generation.

America has fallen behind not just because of the actions of others, but because we currently lack an effective industrial innovation investment strategy.

We can and must do something about that.

A Quick Rewind on American Industrial Innovation

Much of America’s technical innovation in the 20th century came from organizations like GE, Bell Labs, and DuPont. Their focus on research and development drove numerous innovations—from the radio to the major advances in the modern electrical grid, transportation systems, commercial flight, energy, and more—which were major contributions to building the American economy.

As we moved into the information age, we changed how we innovate here in the United States. We expanded the research and development capabilities of our universities. And we shifted the commercialization of many technologies, mainly in software, to Silicon Valley. Being successful there typically follows the venture capital model: “out of every ten early-stage investments, two will create all the returns and the rest will underperform.”

America redefined innovation through the lens of Silicon Valley venture capital.

But while that model works well for software and services, it doesn’t work for a host of industrial topics that underpin our information economy, such as quantum computing, artificial intelligence, semiconductors, and more. Nor is it good for many domains vital to our safety and economy, such as energy, biotech, advanced manufacturing—or even healthcare or the environment.

Bottom line: it’s not cost-effective for many companies to take on these long, slow-return projects—even if they are vital to our nation’s safety and economy. And whereas government might have once filled that research gap, since 1980, most R&D growth has come from businesses, with government spending in R&D largely stagnant since 1986.

That’s a problem.

Let’s Reboot Industrial Innovation in the U.S.

We must reboot industrial innovation in the United States.

Near term, we must focus on investing in specific technology areas not only where we're behind China, but where there are strong commercial markets going forward. For instance, dual-use technologies like artificial intelligence and quantum computing can be game-changers for our nation’s security and economy.

MITRE works across all of government to deliver on our mission: solving problems for a safer world. That gives us a unique vantage point to freely apply learning and experience. As the head of MITRE Labs, I’m committed to making our resources available as the nation’s industrial lab. Here are three thoughts about next steps:

1.    No one organization can do this alone—so let’s form strong partnerships. MITRE Labs offers nearly 4,000 technical staff across a wide range of disciplines, plus MITRE Visiting Fellows and Technical Fellows that are preeminent in their fields. We’d like to join with key partners committed to revitalizing American technical innovation

2.    Choose the right investments in R&D. There’s no lack of opportunities. But which are the key industrial innovations essential to our nation’s economy and safety not only within the next five years, but in decades to come? I believe there is a nexus around telecommunications, artificial intelligence, semiconductors, and quantum that intertwine to enable the next generation of connected society. Others such as green technologies are existential to a secure future.

3.    Let’s remember our economy and industrial innovation are central to our national security. Our nation’s safety is inextricably linked with our economic and technological strengths and weakness. If that’s ever in doubt, just consider Huawei’s impressive rise in telecommunications over the past 15 years as clear evidence of how China uses economic and technological superiority as an instrument of national power.

America is still innovative. But industrial innovation in key areas has lagged in past decades. For our safety and economy, we must turn this around.