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Innovation and U.S. Research Downloaded from pubs.acs.org by UNIV OF TEXAS AT EL PASO on 11/02/18. For personal use only.
Personal Observations on the DPR Process THEODORE W. SCHLIE Office of Science and Technology, U.S. Department of Commerce, Washington, D . C . 20230
For the u n i n i t i a t e d , DPR is shorthand for the Domestic Policy Review on Industrial Innovation. The DPR was officially started i n May of 1978 at the direction of the President. It was an interagency effort, chaired by the Secretary of Commerce, who delegated the day-to-day management to the Assistant Secretary for Science and Technology, Dr. Jordan Baruch. The goal of the DPR was to develop recommendations for the President concerning p o l i c i e s and programs the Federal Government could implement which would p o s i t i v e l y influence the rate and direction of i n d u s t r i a l innovation in the united States. A program plan for the DPR was prepared over the summer, and a c t i v i t i e s began in September. From the very beginning, one of the i m p l i c i t goals of the DPR process was to raise the consciousness l e v e l of the Federal Government, of private industry itself, and of the general public at large, as to the nature and importance of i n d u s t r i a l innovation for the nation. To some extent, we have achieved that goal. "Innovation" i s now a word that i s more commonly used around the country and there are more innovation meetings these days than I could ever go to. Innovation i s more and more a word that firms want to be i d e n t i f i e d with - it i s a good image - and hopefully some of that image will become r e a l i t y . I haven't done a random sample survey, but my own observations of Madison Avenue TV commercials convince me of t h i s . Federal o f f i c i a l s are now also more cognizant of the need for innovation, because increasingly innovation can be related to departmental or agency missions. Not only i s Business Week discussing innovation; Newsweek has also done a cover story on i t . What elements of the DPR process helped i n this effort? Well, f i r s t of a l l , before the process r e a l l y started, a l l Federal departments or agencies involved - some 28 of them were asked to conduct an internal review of a l l p o l i c i e s or programs which d i r e c t l y or i n d i r e c t l y affected innovation. The quality of these reviews varied, but for the most part they were thorough and thoughtful. Many individuals who became This chapter not subject to U.S. copyright. Published 1980 American Chemical Society
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i n v o l v e d i n t h e i r agency reviews stayed i n v o l v e d and turned out to be c o n t i n u a l l y h e l p f u l and supportive throughout the DPR process. The documents themselves provided u s e f u l background information and some s u r p r i s i n g cases of p o l i c i e s or programs that we had not known about. Secondly, there was a very great input from the p r i v a t e s e c t o r i n t o the process. As Dr. Baruch has pointed out from the beginning, i n d u s t r i a l i n n o v a t i o n occurs i n p r i v a t e i n d u s t r y , at the l e v e l of the f i r m . Over 100 executives p a r t i c i p a t e d d i r e c t l y as members of the Advisory Subcommittee from P r i v a t e Industry, and s i g n i f i c a n t s t a f f resources were volunteered as w e l l . We made a d e l i b e r a t e attempt to i n v o l v e not only the V i c e P r e s i d e n t s or D i r e c t o r s of R&D, but a l s o Chief Executive O f f i c e r s , Chairmen and P r e s i d e n t s ; V i c e P r e s i d e n t s and D i r e c t o r s of manufacturing, environmental q u a l i t y c o n t r o l , planning, accounting and f i n a n c e , e t c . ; and a t t o r n e y s , c h i e f economists, and the l i k e . We wanted viewpoints which represented a l l aspects of the i n n o v a t i o n d e c i s i o n process - not j u s t R&D - and we got them. The timing of the p r i v a t e s e c t o r input was a l s o planned. T h e i r subcommittees met from September i n t o December - p u b l i s h ing a f i r s t d r a f t of t h e i r r e p o r t s around December 15th. Government interagency task f o r c e s were organized i n NovemberDecember, and d i d the bulk of t h e i r work from January through March, 1979. This timing provided an overlap which allowed the task f o r c e s to develop and maintain a s i g n i f i c a n t awareness of the d e l i b e r a t i o n s of the p r i v a t e i n d u s t r y subcommittees and who was on them. The meetings of a l l the advisory committees were open to the p u b l i c , and many task f o r c e members attended a t l e a s t some of them. More importantly, however, the timing sequence meant that each of the recommendations made by p r i v a t e i n d u s t r y r e c e i v e d c a r e f u l a t t e n t i o n and a n a l y s i s from the government. Each recommendation was reviewed f o r i t s perceived e f f e c t on i n n o v a t i o n , i t s c o s t , and i t s p o l i t i c a l and institutional feasibility. A s p e c i a l attempt was made to i n v o l v e r e p r e s e n t a t i v e s of technology-based small business i n the process. Although the i n d u s t r i a l subcommittees were dominated n u m e r i c a l l y by b i g business, s e v e r a l r e p r e s e n t a t i v e s of the i n t e r e s t s of small business were on each of them. In a d d i t i o n , s e v e r a l of these small business people formed t h e i r own committee and produced t h e i r own r e p o r t s e t t i n g f o r t h the v i e w p o i n t s and recommendations of small b u s i n e s s regarding i n n o v a t i o n . One of the observations I made during s e v e r a l subcommittee d i s c u s s i o n s was a kind of r e s t r a i n e d i r r i t a t i o n on the p a r t of s e v e r a l r e p r e s e n t a t i v e s from b i g business while the importance of small business to i n n o v a t i o n was repeatedly and a r d e n t l y being espoused. I'm sure you've heard some &f the f i g u r e s c i t e d about the c o n t r i b u t i o n of small business to employment as compared to b i g business, t h e i r c o n t r i b u t i o n i n the form of taxes,
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t h e i r c o n t r i b u t i o n to economic growth, e t c , - and I'm sure you are a l l aware of the d i f f i c u l t i e s which l a r g e , e x i s t i n g corpora t i o n s have i n developing major new product innovations, and how new ventures formed around an innovation l i k e t h i s are o f t e n more s u c c e s s f u l at i t . S t i l l , innovation occurs i n both l a r g e and small f i r m s , even i f the questions of how much and of what kind are debatable, and there were perceived i n t e r e s t s i n common which drew the two s i d e s together on most i s s u e s . I f nothing e l s e , there was a l o t of l e a r n i n g that occurred w i t h i n p r i v a t e i n d u s t r y as the unique problems of b i g and small business were brought out. The most i n t e r e s t i n g i n d i v i d u a l s to watch i n t h i s process were those who had succeeded i n both worlds - thos« who s t a r t e d out w i t h a small company and who had managed i t s growth and development i n t o a l a r g e one. In the end, I b e l i e v e that small business f e e l s i t had i t s f a i r day i n court i n the DPR process. A second, again perhaps i m p l i c i t , goal of the DPR process that was present from the beginning was that of l e s s e n i n g the adversary r e l a t i o n s h i p between Government and business that has i n c r e a s i n g l y dominated our n a t i o n a l economy and s o c i e t y . This adversary r e l a t i o n s h i p i s p a r t i c u l a r l y n o t i c e a b l e when one looks at the s i t u a t i o n i n Japan and Germany - the two n a t i o n s which, are i n c r e a s i n g l y c h a l l e n g i n g us on our own grounds; technological competitiveness and i n d u s t r i a l performance - and even i n some of the newly i n d u s t r i a l i z i n g nations such as Taiwan, South Korea, Singapore, B r a z i l , Mexico, e t c . In these c o u n t r i e s , the r e l a t i o n s h i p between government and business i s one of coop^ e r a t i o n and, indeed, of mutual promotion and dependence. One need not be accused of " s e l l i n g out" to suggest that our own a d v e r s a r i a l r e l a t i o n s h i p i s not n e c e s s a r i l y the best way to do things. There i s f a u l t enough - on both s i d e s - to more than go around, of course, Here again, I b e l i e v e we at l e a s t p a r t i a l l y achieved t h i s goal i n the DPR process and c o n t r i b u t e d to a l e s s e n i n g of t h i s adversary r e l a t i o n s h i p . There i s no doubt that many i n d u s t r i a l r e p r e s e n t a t i v e s came i n t o the process with a " i f government w i l l only get o f f our backs..." a t t i t u d e , and some of them were not convinced otherwise. I t i s a l s o no s u r p r i s e that many government people approached the DPR with extreme s k e p t i c i s m , i f not d i s t r u s t , of i n d u s t r y ' s motives, and some of these f e e l i n g s remained. Years of feuding and f i g h t i n g cannot be made up overnight. But some a t t i t u d e s d i d change. P r i v a t e i n d u s t r y , I b e l i e v e c o r r e c t l y , perceived that i f they p a r t i c i p a t e d i n the DPR as r e p r e s e n t a t i v e s of s e l f i s h , vested i n t e r e s t s i n s t e a d of as business statesmen, the c r e d i b i l i t y of t h e i r p o s i t i o n would suffer. The statesmanlike approach p r e v a i l e d . I learned a l o t as I l i s t e n e d to i n d u s t r i a l spokesmen t e l l of instances where government had made p o s i t i v e c o n t r i b u t i o n s to innovation i n t h e i r own f i r m s , and how the lessons learned could apply to an appro-
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p r i a t e r o l e f o r the government i n the f u t u r e . I a l s o l i s t e n e d with some i r o n y to the sometimes v o c i f e r o u s p h i l o s o p h i c a l debates among d i f f e r e n t i n d u s t r i a l r e p r e s e n t a t i v e s regarding whether or not the government should be h e l p i n g the a i l i n g s t e e l i n d u s t r y — a t t i t u d e s toward government depend to some extent on what i n d u s t r y you're i n . S u c c e s s f u l small businessmen had a d i f f e r e n t a t t i t u d e toward government i n c e n t i v e s d i r e c t e d toward s t a r t - u p of new ventures than d i d those who had experienced f a i l u r e . The " I f I can make i t on my own, you should be able to a l s o " a t t i t u d e was very strong. S t i l l , a l l i n a l l , even over the most contentious i s s u e s — most of them i n the r e g u l a t o r y area — there appeared to be a minimum of h o s t i l e c o n f r o n t a t i o n between government and business and a t l e a s t a w i l l i n g n e s s to explore d i f f e r i n g views and o p i n i o n s . We i n the Department of Commerce f e l t a s p e c i a l r e s p o n s i b i l i t y i n t h i s area. Of a l l the F e d e r a l departments and agencies, we are most concerned with i n d u s t r i a l development; but a t the same time we a r e a l s o part of government and committed to i t s goals o f higher standards i n the environment, i n h e a l t h and i n s a f e t y . A t h i r d goal of the DPR process was to be comprehensive i n i d e n t i f y i n g the wide v a r i e t y o f F e d e r a l p o l i c i e s and programs which might p o s i t i v e l y impact on d i f f e r e n t aspects o f indust r i a l i n n o v a t i o n . In s t r u c t u r i n g the DPR, t h e r e f o r e , a d v i s o r y subcommittees and f o l l o w i n g task f o r c e s were formed according to p o l i c y areas which were recognized to have the most relevance to i n d u s t r i a l i n n o v a t i o n . In order to keep the process manageable, these were grouped under f i v e headings: Economic and Trade P o l i c y ; Procurement and D i r e c t Support o f Research and Development; Patent and Information P o l i c y ; Environment, Health, and Safety Regulations; and Regulation of Industry S t r u c t u r e and Competition. The f i v e p r i v a t e i n d u s t r y advisory subcommittees formed i n these p o l i c y areas were supposed to manage t h e i r own o p e r a t i o n s , however, and so the planned s t r u c t u r e d i d not stay that way f o r long. The Regulatory subcommittee broke up i n t o three groups concerning h e a l t h , s a f e t y , and the environment; each group i s s u e d i t s own r e p o r t , and the three were i n t e g r a t e d i n t o a f i r s t d r a f t report. In Patents and Information, and i n Procurement and D i r e c t Support of R&D, the subcommittees s p l i t and each produced t h e i r own r e p o r t s which stood on t h e i r own. So we ended up w i t h seven r e p o r t s from the p r i v a t e s e c t o r i n s t e a d of f i v e — i f you haven't seen them, they're a v a i l a b l e from NTIS. We had so many requests f o r them that we're out. S t r u c t u r i n g the DPR process i n t h i s way had c e r t a i n i m p l i c a t i o n s and problems a s s o c i a t e d with i t — as any s t r u c t u r e would. I t was obvious that there was going to be some o v e r l a p p i n g among p o l i c y area subcommittees, and there was. The DPR s t a f f t r i e d to coordinate these overlaps as much as p o s s i b l e , but our preference was to d u p l i c a t e r a t h e r than l e t something f a l l
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between the c r a c k s . Although there was a s p e c i f i c subcommittee to address h e a l t h , s a f e t y , and environmental r e g u l a t i o n s , a l l the subcommittees wanted to say something about t h i s i s s u e i n t h e i r r e p o r t s and most of them d i d . Many of the subcommittees a l s o became i n v o l v e d i n tax p o l i c y and tax i n c e n t i v e s , although t h i s again was to have been the r e s p o n s i b i l i t y of the Economic and Trade P o l i c y Subcommittee. Despite our own e f f o r t s , some important i n n o v a t i o n i s s u e s were not addressed i n any great depth by the subcommittees — e.g., the r e l a t i o n between innovat i o n and trade, the s p e c i a l problems of disaggregated industries, etc. The subcommittees were charged with developing recommendations — s p e c i f i c recommendations f o r F e d e r a l policies/programs d i s t i n c t l y targeted toward i n d u s t r i a l i n n o v a t i o n . They again d i d t h e i r own t h i n g . In the Economic and Trade r e p o r t , f o r example, there are numerous s p e c i f i c and targeted recommendations. T h e i r very f i r s t recommendation, however, l a b e l s a l l of them as " j u s t so much t i n k e r i n g at the margin," and goes on to address the general i s s u e of c a p i t a l a v a i l a b i l i t y f o r innovation. In the same r e p o r t , there are numerous d e f i n i t i o n a l problems recognized i n t a r g e t i n g c e r t a i n recommended i n c e n t i v e s to, f o r example, technology-based small business. T h e i r answer to t h i s very tough implementation question was to simply say that the Department of Commerce or Congress should r e s o l v e i t . In the end, however, we got r e s u l t s — some 150 s p e c i f i c recommendations from p r i v a t e i n d u s t r y on what the government should do about i n d u s t r i a l i n n o v a t i o n . A f o u r t h g o a l of the DPR process was to i n v o l v e groups which d i d not produce i n n o v a t i o n , but d i d have some stake or i n t e r e s t i n the outcome. T h i s was done by e s t a b l i s h i n g two advisory subcommittees composed, r e s p e c t i v e l y , of r e p r e s e n t a t i v e s from labor and from p u b l i c i n t e r e s t groups. Labor, of course, has a stake i n i n n o v a t i o n , i n both the short-term and long-term e f f e c t s on employment and the work environment. P u b l i c i n t e r e s t groups have a more d i f f u s e d stake i n the i n n o v a t i o n process, concerned with both the negative e f f e c t s of the a p p l i c a t i o n of technology and the p o s i t i v e s o c i a l b e n e f i t s p o t e n t i a l l y a v a i l a b l e from i n n o v a t i o n . To ignore e i t h e r of these l e g i t i m a t e i n t e r e s t s would have been counterproductive; t h e r e f o r e they were i n v o l v e d , and i n the case of the p u b l i c i n t e r e s t subcommittee, we provided them with support f o r t h e i r own s t a f f . These advisory subcommittees were asked both to respond to and comment on the p r i v a t e i n d u s t r y recommendations, and to develop and provide t h e i r own recommendations regarding F e d e r a l p o l i c i e s and programs r e l a t e d to i n d u s t r i a l i n n o v a t i o n . To the degree to which sharp d i f f e r e n c e s of o p i n i o n emerged on some i s s u e s — p a r t i c u l a r l y between the p u b l i c i n t e r e s t subcommittee and the i n d u s t r y subcommittee on r e g u l a t i o n s — they were able to g e n e r a l l y come to understand the d i f f e r e n t i n t e r e s t s which had to be balanced i n developing i n d u s t r i a l i n n o v a t i o n policy. T h e i r two r e p o r t s are a l s o a v a i l a b l e from NTIS.
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Another goal we had was to b r i n g the most up-to-date knowledge a v a i l a b l e on i n d u s t r i a l i n n o v a t i o n to bear on the DPR process. To t h i s end, a s e r i e s of s t a t e - o f - t h e - a r t papers were prepared by the MIT Center f o r P o l i c y A l t e r n a t i v e s under the d i r e c t i o n of Herb Holloman — soon to be published i n book form — and d i s t r i b u t e d to the advisory subcommittees and the government task f o r c e s . Another s e t of s t a t e - o f - t h e - a r t p o l i c y papers was prepared by NSF and s i m i l a r l y d i s t r i b u t e d . An advisory subcommittee of prominant academics i n the i n n o v a t i o n f i e l d was a l s o formed, c h a i r e d by P r o f e s s o r B r i a n Quinn of Dartmouth C o l l e g e . This subcommittee acted as a d v i s o r s r e a l l y to Dr. Baruch and ourselves on the DPR s t a f f . They a l s o reviewed the r e p o r t s put out by the p r i v a t e s e c t o r subcommittees and made c o n s t r u c t i v e comments regarding t h e i r recommendations. The l a s t aspect o f the DPR process that I'm going to t a l k about t h i s afternoon was the s e r i e s o f seven p u b l i c meetings or seminars, h e l d i n the Department o f Commerce Auditorium t h i s past January. Many of you no doubt attended some of them. These meetings were c h a i r e d by Dr. Baruch and i n c l u d e d , as p a r t of the formal panel, four to f i v e members from the p a r t i c u l a r p r i v a t e s e c t o r subcommittee whose r e p o r t was being discussed, government executives from agencies or departments most d i r e c t l y concerned, and one or more members from the Labor, P u b l i c I n t e r e s t , and Academic subcommittees. The p u b l i c audiences ranged from 50 to 150, I would guess. Snowstorms i n the midwest sometimes intervened i n t h i s process, but telecommunications technology overcame some of the d i f f i c u l t y . The purpose of these meetings was two-fold: f i r s t of a l l to provide a forum f o r i n t e r a c t i o n between the d i v e r s e i n t e r e s t s p a r t i c i p a t i n g i n the DPR process; and secondly to i n v o l v e the p u b l i c , the press, the p r o f e s s i o n a l s o c i e t i e s — a l l who were i n t e r e s t e d i n innovation but were not o f f i c i a l l y i n v o l v e d i n the DPR i t s e l f . The meetings were not a l l sweetness and l i g h t . There was disagreement over c o n t r o v e r s i a l i s s u e s and c r i t i c i s m . The most c o n t r o v e r s i a l area was — again — i n h e a l t h , s a f e t y , and environmental r e g u l a t i o n s . F o r those of you who were not there, here are some personal impressions from one who was l i s t e n i n g and watching i n the audience: of Don Frey, Chief Executive O f f i c e r of B e l l and Howell, snowbound i n Chicago, speaking to the audience from h i s o f f i c e by telephone hookup, and complaini n g about the l a c k of technology to do something with mountains of snow even when removal equipment has the s i t u a t i o n under c o n t r o l ; of Dr. Baruch, making the u l t i m a t e s a c r i f i c e and putt i n g out h i s c i g a r at the request of the p u b l i c i n t e r e s t r e p r e s e n t a t i v e , C l a i r Nader; of George Lockwood's r e c i t a t i o n of the F e d e r a l , State, and L o c a l r e g u l a t o r y problems faced by a small businessman i n a new and unique i n n o v a t i o n area; of the debate between Donald Kennedy, then Commissioner of FDA, and C o r n e l i u s P e t t i n g s , Executive V i c e P r e s i d e n t of E l i L i l l y , over the i n t e r p r e t a t i o n and relevance of data r e l a t e d to i n n o v a t i o n
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i n the drug i n d u s t r y ; of the question from Labor of how one can place a value on the l o s s of an arm to the worker who cannot play c a t c h with h i s son on Sunday afternoon, and Dr. Baruch's response t h a t , from the government's viewpoint, i n a l l o c a t i n g i t s l i m i t e d resources among v a r i o u s missions, government does place value on such t h i n g s ; of C l a i r Nader's defense of r e g u l a t i o n s , c r i t i c i s m of i n d u s t r y ' s past performance i n f a i l i n g to provide high enough standards of h e a l t h , s a f e t y , and e n v i r o n mental p r o t e c t i o n , and challenge to i n d u s t r y to develop t e c h nology to solve these problems r a t h e r than expend resources on f i g h t i n g r e g u l a t i o n ; of s p i r i t e d and provocative questions and remarks from the audience; and so on. I t was, to say the l e a s t , an i n t e r e s t i n g time. The f a c t that i t was c a r r i e d o f f successf u l l y was due i n p a r t to the competence and c o n s i d e r a t i o n shown by the p a r t i c i p a n t s , and i n part to the s k i l l s of Dr. Baruch i n moderating d i v e r s e opinions and keeping the focus on i n n o v a t i o n . From t h i s p o i n t on, the DPR process went i n t o executive session — i n t o the Executive Branch process. Interagency task forces operated i n each of the seven p o l i c y areas, developing recommendations which were submitted to the DPR S t e e r i n g Committee. This personal view of the formative and background s t u d i e s and work which supported the DPR should a i d i n understanding the s i g n i f i c a n t cooperative e f f o r t on the p a r t of the concerned p u b l i c and p r i v a t e sectors which went i n t o t h i s endeavor. RECEIVED November 13,
1979.
