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Remarks at Department of Commerce University Innovation Forum, Georgia Institute of Technology

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Thursday, July 15, 2010

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Commerce Secretary Gary Locke
Remarks at Department of Commerce University Innovation Forum, Georgia Institute of Technology

Thank you, President Peterson for your remarks and for your kind introduction.

And thank you to Georgia Tech and all of the business and academic leaders who are here today. 

And let me acknowledge my colleagues from the Department of Commerce here today, John Fernandez, the Assistant Secretary of Commerce for Economic Development and Patrick Gallagher, who heads up the National Institute of Standards and Technology, or NIST. 

Georgia Tech University has long provided America with some of its top intellectual talent.  And it is increasingly turning Atlanta into a magnet for a new generation of American innovators and entrepreneurs.

I know first-hand how important institutions of higher education are as catalysts for state, regional and local economies. 

Washington State, where I was privileged to serve as governor for eight years and for 11 years in the state house, is home to six public four-year colleges and universities and 34 community and technical colleges – all of which we are proud of.

But here in Atlanta, you set very a high standard for how universities and the private sector can work with federal research dollars to create businesses and jobs right here in Georgia.

The challenge is to make this high level of performance in technology commercialization the standard nationwide.

Because when you look at the big picture, it is hard to escape the conclusion that America’s innovation engine is not as efficient or as effective as it needs to be.  Too often, we fail to:

  • create the right incentives or allocate enough resources to generate new ideas;
  • develop those ideas with focused research; and,
  • turn them into businesses that can create good jobs. 

And when this innovation engine isn't working as well as it should, it means we are neither providing as many benefits to society as we could, or creating as many jobs as we should. 

That is simply not acceptable.

Every stakeholder – from government, to universities, to business – has areas where it can do better. 

Over the next few hours, I'm eager to hear your ideas on how we can get things moving in the right direction.

But before we get started, it’s useful to identify what exactly needs fixing.

The first problem with our innovation system is urgent -- but at least we have a pretty good idea how to fix it.

We’ve simply got to devote more resources to research and development -- especially at the federal level.

Although America has always looked to entrepreneurs to build our companies, we know that historically, the first kernel of an idea for a new technology or invention was often spawned in a vast network of public and private sector research labs.

As President Obama noted in a speech to the National Academy last fall: “It was basic research in the photoelectric field that would one day lead to solar panels.  It was basic research in physics that would eventually produce the CAT scan.  The calculations of today's GPS satellites are based on the equations that Einstein put to paper more than a century ago.”

That’s a history lesson America seems to have forgotten over the past few decades.  As a share of GDP, American federal investment in the physical sciences and engineering research -- which was often funneled to our universities -- has dropped by half since 1970.

Fortunately, President Obama has grasped the urgency of the problem.

Last year’s Recovery Act included $100 billion to support groundbreaking innovations in diverse fields, from healthcare IT and health research, to smart grids and high speed trains.

Last year, the president also announced a National Innovation Strategy, which among other things, called for doubling the budgets of agencies such as the National Science Foundation, so they can better support basic research at our nation's universities.

And the President’s 2011 budget -- while freezing domestic discretionary spending overall -- increases funding for civilian R&D by $3.7 billion, or nearly 6 percent.

These are huge steps, but they can only be viewed as a beginning. 

Because the second problem with our innovation system is that even in areas where we are allocating enough funding for R&D, we’re not doing a good enough job getting these ideas into the marketplace.

American is not lacking for groundbreaking ideas.  Nor are we short on entrepreneurs willing to take risks.

What we need to do is get better at connecting the great ideas to the great company builders.

That is why 10-months ago, the Commerce Department set up the Office of Innovation and Entrepreneurship to drive policies that help entrepreneurs translate new ideas, products, and services into economic growth. 

Firms less than five years old have accounted for nearly all net new jobs in America over the last 30 years.

That’s why empowering entrepreneurs needs to be a central part of any job creation strategy.

Earlier this year, our Office of Innovation and Entrepreneurship brought together university presidents and other key stakeholders to discuss how the Administration can work with all of you to more effectively move ideas from the lab to the marketplace. 

We got some 80 recommendations from that forum and today's event is one more important step in our outreach efforts. 

We recently held similar forums at the University of Massachusetts, the University of Southern California and earlier this week, at the University of Michigan.    

And our Office of Innovation and Entrepreneurship isn't just looking at technology commercialization at universities. 

We know that some of these same challenges exist at federal research labs, which is why we'll also be having a variety of forums with people in and out of government to improve commercialization emanating from our federal labs.

In addition, just last month, Commerce announced the i6 Challenge, a new $12 million innovation competition, where we will make 6 awards to teams that have the most innovative ideas to drive commercialization and entrepreneurship in their regions. 

We are partnering with the National Institutes of Health and the National Science Foundation, and we’ve gotten great interest in this new competition, with some 1,300 participants on our conference calls.  We hope that universities across America will ultimately throw their hats in the ring for this competition. 

There is a common theme running through all these efforts:  and that is at Commerce, we know we don’t have all the answers.  We know that the people out on the front lines have a lot of wisdom to offer. 

That’s why on Tuesday, I announced the formation of the National Advisory Council on Innovation and Entrepreneurship – which includes as one of its advisors Georgia Tech’s very own Bud Peterson.

The council consists of academics, entrepreneurs, investors and nonprofit leaders, and will play a key role in advising us on innovation and entrepreneurship policies, and I'm looking forward to getting it off the ground.

I know that President Peterson and his colleagues will have a lot of valuable advice on technology commercialization, but I also expect they will be able to help Commerce develop a much broader strategy to spur innovation, and to enable entrepreneurs to develop breakthrough technologies and dynamic companies.

Economists actually have names for these types of fast-growing companies.  They’re called “gazelles.” 

And we know where “gazelles” thrive.

Their habitat is close to research universities, in science and technology parks, laboratories, and business incubators – places where innovations can not only be developed, but also brought to market.

They thrive, in short, in places like Atlanta. 

And under President Obama, our Economic Development Administration is collaborating with local communities to help them leverage their unique strengths and assets and create what Harvard’s Michael Porter has termed “regional innovation clusters.”

This region is a model for what these Regional Innovative Clusters can look like – and how their success can drive local economies.

Yesterday’s Journal-Constitution ran a story about a new hydrogen energy company that plans to relocate from Texas to Atlanta, bringing with it potentially 300 jobs to the Atlanta-metro area. 

And one of the main reasons this company is moving here is that the co-director of Georgia Tech’s Center for Innovative Fuel Cell and Battery Technologies vouched for Atlanta’s innovative spirit. 

Doctor Meilin Liu was able to do this, not only because he’s a great pitch-man … but because of what Georgia Tech is doing to support groundbreaking research, and its commercialization:   

  • Forbes Magazine rated Georgia Tech’s Advanced Technology Development Center as one of 10 technology incubators that is changing the world for its role in supporting technology companies;
  • And Georgia Tech’s Technology Enterprise Park already has had a hand in the growth of Georgia’s two leading biotech companies, Altea Therapeutics and CardioMEMS.

The genius of these innovation clusters is that different parts of the country can leverage their unique strengths to accomplish a common goal: 

  • producing world-class goods and services;
  • creating well-paying, sustainable jobs; and
  • growing our nation’s economy.

Of course, the key feature of Regional Innovation Clusters -- which is that local regions can identify and build upon their unique strengths and assets -- also presents a challenge.

Because there is no one-size-fits-all strategy.  And that's the same challenge with technology commercialization.

Certain universities like the Georgia Tech have obviously hit upon a very successful approach.  But how do we scale it up? 

How do we take the lessons learned here and apply them to communities and universities nationwide?

These are some of the difficult questions we need to try to work through today…

One approach that I particularly like is the partnership that Georgia Tech has sought out with some of the state’s smaller colleges and universities.

Georgia Tech is also lending its administrative and legal expertise to researchers at smaller schools, including some historically black colleges and universities, so that academics there have an easier time commercializing their research.

Expanding opportunities for minority businesses is a high priority for the Commerce Department.  And later today, I am actually going to attend a listening session sponsored by Commerce’s National Telecommunications and Information Agency here in Atlanta on the challengers minority businesses face in accessing and thriving in the Internet applications and services space….

I anticipate that it will be just as productive and interesting as the conversation we’re about to kick off.

So thank you for attending and participating today …and I am looking forward to hearing from all of you.