Monthly Archives: October 2011

Innovation, Science and Money II

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In my last blog I discussed some of the budgetary cuts occurring in the US and how these cuts are going to impact the future of science. I want to spend some time explaining why this is the case. I mentioned something called Path Dependency, what do I mean by this? Well it’s a pretty simple concept, once you start down a policy path your choices are constrained by your previous choices and the results based on those choices.

This type of path dependency can be seen in scientific and technological changes. For example, if a piece of technology has three parts each one can be improved independently. If each one can be changed in one direction, from a 0 to a 1 each change could impact how likely a specific technology would be selected by consumers. Each change could lead to a local optimal, and could prevent the technology from becoming a global optimal. Additionally, these changes over time, with further research, could lead to radical different technologies. This happening from changing a single feature from on or off. Basically, it’s an evolutionary process.

Policy works the same way. There’s a paper written by Mustar et al (2008) that discusses the policy choices in France and the UK. The objective of the paper was to investigate the impact of policy choices on the creating of academic spin-offs. Some of the results lead to additional technology incubators in the UK and in France. However, the number of academic spin-offs in France actually decreased, however in the UK they increased significantly.

These differences came about because of previous policy choices. For example, France has laws related to civil servants and starting a new company. In France all professors are considered civil servants, so there is a history of professors not starting companies. There’s a lack of culture for entrepreneurship in France for increasing the number of academic spin-offs.

This is what I meant by path dependencies. Decreasing the amount of money going into meaningful academic research will have an impact in other ways. In the US there has been an increased push for increasing the number of companies being started. Scientific research can be turned into new companies through academic spin-offs. Decreasing the funding at two of the biggest funding agencies will decrease the number of academic spin-offs.

References:
Mustar et al 2008 http://www.springerlink.com/content/68282r1460889062/

Innovation, Science and Money

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The death of Steve Jobs has really shaken the technology community. It has really made people do a lot of thinking about innovation and the impact of technology based companies on the economy. The Economist notes that the American work force is on the decline and the high tech companies aren’t making up enough jobs. That now companies like Apple and Google employ less than a third of what companies like GM used to employ. These high tech companies don’t need as many employees. Additionally, it’s a different type of work force that are required in the US. Apple outsources manufacturing because they are really concerned with driving down the cost of manufacturing and maximize profits. This is good business.

In a long article by Peter Thiel, co-founder of Pay Pal and a venture capitalist, he discusses what he calls the end of the future. Where he claims that we’ve been in an innovation slow down since the 70’s. He also argues that scientists and technologists aren’t living up to the claims they are making. He argues that in a lot of ways we’ve been technologically stagnant. Politicians have been making the same promises on energy since the 70’s and that we’ve been slowing down are rate of increase of production for food barely keeping up with population growth. I think that he does make some good points, but he definitely goes a bit over the top with his statements. He’s looking at things only within the national and regional context and is ignoring the fact that there have been cultural changes that have driven a change in how companies innovate.

Historically, companies don’t find value in doing basic research. If you look at the history of research labs within industry, they hire researchers to do incremental and radical innovation. However, this research is carried out within a scientific paradigm which was created in basic research.

In fact we’ve seen a decrease in the amount of R&D being spent by companies. This has lead to some of the stagnation in innovation that Thiel mentions. To combat this and to reduce the risk borne by the company they have been doing more and more contract research with universities and have increase the amount of money they spend with universities.

Thiel also mentions that the government might be able to help but doesn’t see it ever going to happen when you have to justify the expense by cutting something else. Since he’s a libertarian he feels that the budget must be balanced. However, our politicians are cutting budgets to the largest scientific funding agencies in the US. My wife sent me an email with some of the funding cuts, National Science Foundation is getting cut by 2.3%, in fact it’s 14% below the budget requested by the administration. The National Institute for Standards and Technology’s budget is getting cut by 9.3%. Both of these agencies create a large number of jobs. It’s been shown that one research job creates several other jobs. Cutting these budgets will reduce the amount of research which can be conducted. This will impact the number of researchers, impact the quality of education at universities and slow down the ability for universities and firms to exploit new research.

It typically takes 10 years for research to be monetizable. Cutting funding now impacts employment now and future employment. In fact, these changes will have a long term lasting impact. These choices create a path dependency within our society. Without proper funding we’ll be passed by some one that feels research is paramount.

Occupy Wall Street

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Since September 17th people have been having a live in protest on Wall Street in New York City. The protests are attempting to bring attention to the inequities between Wall Street, CEOs and the rest of the US and world. There has been a media blackout since it started until recently. The Daily Show has covered it twice (Here and Here). There were two reasons for this. First the media didn’t know how to deal with the protests. They act differently, the people protesting aren’t grandmothers yelling about the government, instead it’s a bunch of hippie like people that are protesting corporations. Another problem was that there was no cohesive voice coming out from the movement. However yesterday there was an actual list of “demands” released. Basically these demands explain the need for changes at all levels of government and how corporations behave towards both workers and the environment.

The protests are in their third week now. They have been growing every week. Initially, there were only a few hundred protesters now it’s been reported that up to 20,000 people have started to protest in NYC. The occupy movement has spread from only being in NYC to Boston, LA, DC, and several other cities as well. While the Daily Show is right that these protests are very similar to the Tea Party protests the problems they hope to address the end goals and the means are very different. Both groups also had a lot of uninformed people, for example you had the old lady saying keep the government out of my healthcare when she had medicare (government healthcare), and here you have people just saying they want Wall Street to take less money. These protests have gone beyond just the hippies, unions in NYC have also joined the protesters as well as more “responsible” people from other walks of life.

I think these protests could eventually make a difference. I don’t think it will happen in time for the next presidential election. The changes that they are demanding are structural changes that require socio-economic changes. They require complete changes in our ethics and our goals in lives. These are not changes that happen over night. There are some changes that we can do that will have immediate impacts though, and these aren’t popular among policy makers. We need to get money out of politics, we need to limit how politicians can make money off the laws they pass and we need to use public funds for elections (as well as have elections on the weekend or a holiday). Removing the money by creating public funds will eliminate the leverage that lobbyists can use on politicians. Preventing politicians from making money off the laws through stock purchases will prevent tit-for-tat behavior with lobbyists as well. Making it easy as possible to vote will increase the immediate participation in the government.

The reaction to OWS in NYC has been horrifying. The cops have been brutal towards the protesters and really show that the indignation our leaders displayed during violent responses to protest are just words. If US politicians cared about freedom and democracy they would support the protesters. Protesting is part of being American. It’s part of our constitution because it drives conversation and it drives democracy. Protesting is a form of participation. If we aren’t able to participate we don’t have a democracy. Arresting 700 people for going to the protest isn’t acceptable. Pepper spraying women that were corralled is not acceptable, it’s not how a democracy deals with protests. The right way to deal with these protests is to invite them into the conversation and really take a look at what they have to say. We aren’t doing that in the US. The 99% don’t have the same voice as the 1%. As can be seen from Fox News, that 1% is trying to divide the 99%.

Remembering Steve Jobs

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This post will piss a lot of Apple Fans off. I’m going to say that now.

Steve Jobs was a great designer. He built a company up twice based on maximizing control over the hardware, design and the software. He was able to do this an incredibly well. He was able to use this skill to dominate the early computer industry. However, under more competition Apple faltered as it relied heavily on a single creative driver. The designs that Apple created were radical design, these designs in a way constituted a type of radical innovation. The components within the computers themselves weren’t radically improved over the competitors, the design was what made it special.

This is the same for the iPod. By the time the iPod came out there were already many MP3 players and many of them were doing very well. What Apple was able to do was make it simpler to move music onto the device and interface with the device itself. This is the radical portion of the iPod. I feel that this is exactly what happened with the iPhone as well. They created a radical design for the interface, but in many cases didn’t even have legacy features.

Apple does a great job in marketing what any other phone maker would have expected as a normal feature. Even some of the biggest changes, like the fantastic screen it’s an incremental innovation. As a consumer I fully expected some of the newest phones to have amazing screens.

One of the things Jobs did best was to get people to buy the newest version of Apple’s phones. The iPad was also a very similar type of innovation. It’s a gigantic iPhone. However, the reason it worked so well was the fact that iOS was able to scale up and work well on it. In the end I feel that Jobs was able to use cases of Radical Design innovation with incremental technological innovation a loyal consumer base to turn products into massive success.

However, Jobs has also turned Apple into one of the largest patent trolls in the world. With the level of control that Jobs had over Apple, it seems unlikely that he would not have initiated the litigation. Jobs did remember how they lost the PC war in the 80’s and 90’s. I think that Jobs is attempting to use patent law to control the market. There were no software patents during the initial PC battle, however there are software patents now and Apple has been patenting a great deal in order to control how devices are marketed and developed.

Finally, I think that Jobs was what Jim Collins called a level 4 leader. Similar to Lee Iacocca (of Chrysler), Jobs was able to control Apple through sheer personality and create a great company. However, he doesn’t like dissent and would probably pull a George Lucas and change the original Star Wars trilogy.

Jobs did have a vision of what devices should look like and how they should work. He was excellent at creating great designs. He will be remembered for saving a trouble company, bringing design back into mobile devices and forcing a huge number of companies to compete in the mobile market space.

The ACTA has been signed

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For those of you who aren’t aware the US and many other countries have signed the Anti-Counterfeiting Trade Agreement or ACTA. This law provides a legal framework for nations across the world to enact something similar to the US Digital Millennium Copyright Act (DMCA). This framework gives additional control to law enforcement and copyright holders. Something also abnormal about this trade agreement is that the US claims that it doesn’t need congressional approval. I find this extremely odd, as it’s part of the charter of the legislative branch to approve trade agreements. Additionally, as I’m not a lawyer, I don’t understand what’s inherently different in the ACTA from the South Korean Free Trade Agreement, which has been stalled since Bush II.

At this point the EU hasn’t signed the agreement yet. France and Germany have both enacted some already strict laws in regard to the number of strikes an infringer can have before they lose internet connections.Of course there are some serious issues with the approaches that are used to accuse copyright infringers. most of them deal with how to identify a suspected infringer. At this time France’s first three strike infringer doesn’t know how to do that. Additionally, in Germany, where a legislator wants a 2 strike law, the same legislator has already violated this before the law has gone into affect.

I believe that these cases really indicate that legislator really don’t understand how the internet and copyright works. It’s clear from the DMCA that they don’t and neither do judges. However, I think that Judges are starting to seriously figure out what’s going on with copyright and the controls that are being put into place. Recently in several districts judges have severed joint cases of copyright cases, because most of the IP addresses, which are typically associated to a region or city, were outside the jurisdiction of the court they are being tried in. Additionally, some judges are noting that IP addresses aren’t people and other people could be using the IP address. Even more recently a judge writes that in the DMCA suggest if you own a DVD it’s ok to rip it.Which is something that the DMCA is trying to prevent. DMCA was design to prevent circumventing the copy blocking technologies. It made it illegal.

Overall, the ACTA is a huge blow for advocates of reducing or eliminating copyright. I seriously hope that if this trade agreement does have to go through the US congress that it will be rejected. It’s a law that doesn’t take into account the current technologies and what culture really means.

Fortunately, not all governments support the ACTA. In fact Brazil has created an interesting framework that is the antithesis of ACTA. It is designed to support privacy, encourage usage of Creative Commons copyright(left) protection and have true net neutrality.