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Public research policy must help create private sector jobs

Job creation is one of two issues that members of both political parties agree are priority issues for the 2016 presidential election. It is imperative that public policy, particularly research policy, facilitates private sector job creation.

Lobbying groups argue that publicly funded research conducted in the United States is key to U.S. job creation. Some suggest we should feel threatened by small nations spending a larger fraction of their gross domestic product on research and development than the U.S.

Their claims derive from the mid-20th century, linear model of innovation which argues that research is the first step in the innovation process.

From the perspective of job creation it makes little difference where research is conducted. Two examples support this:

New Mexico has the highest investment in R&D per person in the United States, yet its job creation and economic growth rates lag those of surrounding states. New Mexico’s R&D expenditure is dominated by public funding for government-owned laboratories and universities; private funds dominate the R&D investment in neighboring states.

However, as Clayton M. Christensen at Harvard has pointed out, much of the private sector’s innovation kills or sustains jobs and does not create new jobs. There are roles for public investment in research that create private sector jobs; however, these are new, not traditional roles.

For companies that lead the world in sales of high tech products, there is weak correlation between where the pioneering research was conducted and the location of the current market leader.

Research that led to creation of the cellphone was conducted at Bell Telephone Laboratories in New Jersey, the first company to introduce a cellphone into the marketplace was Motorola in Arizona, and today’s leading marketer of cellphones is Samsung in South Korea.

As Christensen has concluded in his work, it is new market-creating innovation that establishes new jobs and stimulates economic growth.

He and his collaborators argue that market creating innovation is built on targeting non-consumption, unfulfilled needs in new markets; training programs must teach entrepreneurs how to see such non-consumption and estimate the rewards of eradicating it.

As the chain-link model pioneered by Stephen J. Klein at Stanford and refined by Nathan Rosenberg at Harvard tells us, research conducted around the world can be an important component of innovation provided it grows the local knowledge base used by entrepreneurs to target non-consumption, unfulfilled needs in new markets. The ideas of Christensen, Kline and Rosenberg suggest new roles for publicly-funded research and development to make it have more impact on job creation.

Universities like the University of New Mexico and government-owned laboratories like Sandia and Los Alamos should develop courses that help prospective local entrepreneurs identify unfulfilled public needs.

For example, the late Larry Johnson left Sandia Labs in the 1960s to become an Albuquerque entrepreneur and start three new companies. Lunch collaborations with Albuquerque’s young Bill Gates helped him identify where computers were headed and to spot unfulfilled emerging markets.

Although Larry was successful in creating jobs in Albuquerque, if he had been supported by a more formal system for identifying unmet needs, perhaps he could have created a local Microsoft-like entity.

While researchers in universities and government laboratories are generally up-to-date on research in their research specialties, engineers doing development work that can be the basis for an entrepreneurial endeavor are often unaware of the latest research advances.

As nations around the world increase their investment in research, it is imperative that their advancements be turned into local knowledge that entrepreneurs can use to fill unmet public needs.

LANL and Sandia could use part of their research funding to synthesize research advancements made around the world in selected areas and convert these into local knowledge that Albuquerque entrepreneurs can utilize in their work. For example, a treatise on how entrepreneurs around the world are creating new uses for Internet of Things could be useful to prospective entrepreneurs.

Also signed by G. T. Cheney, and Ed Graham, who also are former members of Sandia National Laboratories management.

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