Clinton's holed flagship

Investing in Innovation - Driving Change

March 26, 1999

Both of these books analyse different aspects of the breakdown in US corporate dominance that occurred in the 1980s. The first evaluates the Clinton administration's effort to build a portfolio of civil research and development programmes to remedy perceived private-sector deficiencies. The second examines "new" management practice among US multinationals trying to secure their weakened competitive positions.

Before the Clinton-Gore civil research and development initiatives had time to blossom, the Republican Party captured Congress in 1994 and set about cutting them. In this year only $3 billion of a total of $71 billion federal spend on R&D was allocated to civil programmes. Today the "military-driven mission" remains the typical form of US federal R&D policy. In response to this policy stalemate, the Clinton administration invited Lewis Branscomb and his colleagues to evaluate the new initiatives and make recommendations for their improvement. Their book is an expansion of their 1997 report to the administration that aimed to establish bi-partisan support for future civil technology policy.

The book's major omission is a chapter on why and how the Republicans attacked these initiatives. This is almost certainly because of the political bridge-building function of the report. Nevertheless, one can identify a pattern in the chapter reviews: programmes to which the administration attached its prestige, and which lacked other forms of political support, drew most Republican fire. The chapter by Christopher Hill lists at least 11 evaluations of the $200 million Advanced Technology Policy programme, "an extraordinary level and quality of evaluation". ATP may have suffered from its focus on relatively few firms and the consequent narrow political basis of its support.

In contrast, the Manufacturing Extension Programme has established more than 70 manufacturing technology centres across the US to diffuse new technologies and best practice across small and medium-sized businesses. This imitation of a similar Japanese policy represents a radical, successful policy departure for the US.

Scot Wallsten's chapter on the largest of the Clinton-Gore programmes, Small Business Innovation Research, represents another example of the political logic of programme survival. This initiative provides no additional financial support but requires an increasing proportion of existing programme and agency budgets to be spent on small firms - 2.5 per cent and more than $1 billion in 1997. Wallsten argues that this large and growing programme makes a dubious contribution to innovation. Nevertheless it is assured of bi-partisan support, almost certainly because its projects are within the traditional military domain.

Driving Change is aimed at senior managers rather than academics, despite its lead author, Yoram Wind, being professor of marketing at the Wharton School. It is based on interviews with "leading" companies and is an enjoyable read provided you like your theory "lite".

It does have some good "company stories", though the group from which examples are drawn is narrow: four firms are used more than 25 times each - Xerox, GE, General Motors and IBM. This matters less if the book is treated as a series of inspirational examples. Nevertheless, like others of its type the book must argue that where the "best" lead others should follow. But you will not find a discussion of which practices are transferable or how to transfer them. Nor can you expect a discussion of evidence of diffusing "worst practices", such as the grotesque widening in the ratio of CEO to worker salaries in the US, directly contrary to what we would expect if the "stakeholder" concept was proving popular with US management.

The attempt to build theory by organising these company stories into grand themes is poor. The first 70 pages, devoted to the "drivers" of change fails signally to equal the understanding available from a good newspaper. There is a great deal of overlap: the chapters on "The market's impact", "The customer's demands" and "Absorbing the customer", could have been merged without any loss. Unfortunately, the "idea" here amounts to little more than the assertion that customers now are more demanding and that firms have to respond to this.

But it is possible to be too critical of a book that seeks to entertain and gently broaden readers' minds. If managers do not have time to read The Financial Times, Driving Change offers a kind of alternative.

John Howells is lecturer in the management of technology and innovation, Brunel University.

Investing in Innovation: Creating a Research and Innovation Policy that Works

Editor - Lewis M. Branscomb and James Keller
ISBN - 0 262 02446 2
Publisher - MIT Press
Price - £30.95
Pages - 516

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