The Venturesome Economy

President-elect Obama's commitment to maintain America’s technology leadership in the world, through an increase in public funding of basic research, has coincided with the publication of a new book on innovation, The Venturesome Economy, which questions the value of such an approach while in Ireland, billions of euros continue to be spent on university research in pursuit of the goal to become a "world class knowledge economy" by 2013

Amar Bhidé, an Indian-born professor at the Columbia Business School, argues in The Venturesome Economy, that while innovation typically comes from scientists and engineers, the obsession with the number of US doctorates and technical graduates compared with the rising numbers in China and India, is misplaced because the “high-level” inventions and ideas cannot be easily contained within national borders and Asia cannot prevent America from capitalizing on their inventions with better business models.

Bhidé says when breakthrough ideas know no borders, a nation’s capacity to exploit cutting-edge research regardless of where it originates is crucial: America's venturesome consumption—the willingness and ability of its businesses and consumers to effectively use products and technologies derived from scientific research—is far more important than its share of such research. In fact, Prof Bhidé says a venturesome economy benefits from an increase in research produced abroad: the success of Apple’s iPod, for instance, owes much to technologies developed in Asia and Europe.

Many players—entrepreneurs, managers, financiers, salesmen, consumers, and not just a few brilliant scientists and engineers—have kept the US at the forefront of the innovation game. As long as their venturesome spirit remains alive and well, America need not fear advances abroad. The Venturesome Economy explains why—and how it can keep it that way.

Bhidé says his study shows how mid-level players combine and extend higher-level innovations. The VC-backed businesses use different people and procedures than the typical lab doing high-level research: They employ a much smaller proportion of PhDs in their technical staff, and their overall workforces contain a larger proportion of managers and sales and marketing staff. In contrast to the physicists who developed the modern transistor inside the precincts of Bell Labs, the development teams of many of the VC-backed businesses he studied had a close, ongoing relationship with users. Communication and persuasion were as crucial as technical virtuosity, and the technical tasks themselves involved more ad hoc improvisation than classical scientific experimentation.