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Erasing our innovation deficit

By Eric Schmidt
Tuesday, February 9, 2010; 10:14 AM

We can see it reflected in our search trends at Google: Too many people are out of work, and the fear of unemployment is changing the behavior of millions more. In the fall, searches related to back-to-school shopping and holiday travel bookings peaked weeks later than usual, as families put off spending as long as possible. At the same time, queries for payday loans have gone up a third in the past two years.

To spur job creation and alleviate the fear of unemployment, the United States will need to tackle what Commerce Secretary Gary Locke has called our "innovation deficit." We have been world leaders in innovation for generations. It has driven our economy, employment growth and our rising prosperity. But much of the cutting-edge research and development in key areas such as renewable energy now takes place outside the United States. There's a real chance that the "green Silicon Valley" will take root in Germany or China. We can't afford to let that happen.

Addressing the innovation deficit requires rethinking our innovation model. We can no longer rely on the top-down approach of the 20th century, when big investments in the military and NASA spun off to the wider economy. Now that the Internet has put abundant information and powerful tools in everyone's hands, innovation is often driven from the bottom up. The ideas that power our next generation of growth are just as likely to originate in a coffee shop as in the laboratory of a big corporation.

More than ever, innovation is disruptive and messy. It can't be controlled or predicted. The only way to ensure it can flourish is to create the best possible environment -- and then get out of the way. It's a question of learning to live with a mess.

First, start-ups and smaller businesses must be able to compete on equal terms with their larger rivals. They don't need favors, just a level playing field. Congress should ensure that every bill it passes promotes competition over protecting the interests of incumbents.

Second, encouraging risk-taking means tolerating failure -- provided we learn from it. If we want to be a leader in new industries such as green energy, we have to accept that some of our investments won't pan out. Show me a program with a 100 percent success rate, and I'll show you one with 0 percent innovation.

Third, we need to invest more in our knowledge base. The decision by Congress to double science funding last year was a big step in the right direction. Now we need to extend the R&D tax credit so businesses can confidently invest in their future.

Fourth, information must become even more open and accessible. Government-funded research should be made public through "a Wikipedia of ideas," so entrepreneurs can harness ideas commercially. High-speed Internet access must be much more widely available. Broadband is a major driver of new jobs and businesses, yet we rank only 15th in the world for access. More government support for broadband remains critical.

Finally, we need to hang on to talented people. The best and brightest from around the world come to study at U.S. universities. After graduation, they are forced to leave because they can't get visas. It's ridiculous to export such talent to our competition.

We have everything else we need to climb out of the current morass. Right now, somewhere in the United States, someone is working at a kitchen table, in a dorm room or a garage, developing an idea that could not only create a new industry but could also just possibly change the world. If we provide the right environment, she'll do the rest.

The writer is chairman and chief executive of Google.

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