America’s innovation engine is running out of gas. Corporations in the US have been slashing internal long-term research and development spending for decades and, most recently, investments in venture capital-backed start-ups. Confronting an increasingly competitive global economy and the emergence of well financed centers of innovation outside of long dominant Silicon Valley, the case for a major reversal could not be stronger, nor could the consequences for failure be higher. The time has come for today’s equivalent of the Manhattan Project that built the atom bomb – an initiative focused on the creation of value from ideas through innovation. Partnering the market knowledge and distribution channels of large corporations with the imagination, creativity and risk capital that have shaped Silicon Valley as the focal point for technology-driven innovation for 50 years is paramount. Through integration with our universities, and with long term research support from the federal government, the US can reverse the perilous slide in core and applied research that have been the foundation on which the modern US economy has been built. The bottom line – corporations can and must help to redefine the role of American competitiveness and venture capital and leading-edge start-ups are their natural allies and compatriots. Consider, for example, the fall of General Motors, once the biggest industrial company in the world and now the beleaguered ward of the US government. If it had removed its blinkers and realised it could no longer pursue a business model based on the now-defunct era of cheap energy, it might have invested in, say, Tesla Motors, the prominent California maker of all-electric vehicles. Then GM might have averted its fate. A significant reduction in the innovative role of major US corporations has been under way for three decades. Just a generation ago, AT&T’s Bell Labs, IBM’s Watson Labs and Xerox’s Palo Alto Research Center were key engines of American innovation and the envy of the developed world. In 1981, US corporations with more than 25,000 employees represented about 70% of the investment in industrial innovation in America, according to the National Science Foundation. By 2006, that figure had plummeted to 37%. Fortunately, a new model of US innovation emerged to pick up the slack. Backed by VCs, and in partnership with major university research centres, the world’s best and brightest engineers and scientists demonstrated they could out-innovate the corporate labs of the past. These innovation machines – VC-backed start-ups – proved that risk-oriented entrepreneurs, rewarded commensurately for…

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