The Innovation Imperative

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The Innovation Imperative

• Bill Bates
• Vice President
• U.S. Council on Competitiveness

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Council Background

• Founded 1986 by John Young (CEO Hewlett-Packard)
• Non-profit, non-partisan, non-lobbying
• Mission to set a public policy action agenda to
  drive
• U.S. productivity growth
• High living standards
• Success in global markets

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Council Background

• Membership
• Only national organization whose membership is
• personal
• comprised exclusively of CEOs, university
  presidents and labor leaders today, nearly 180
  members
• Leadership
• Chair Duane Ackerman, CEO, BellSouth Corporation
• Immediate Past Chair Raymond Gilmartin, CEO,
  Merck
• University Vice Chair Wayne Clough, President,
  Georgia Institute of Technology
• Labor Vice Chair Vacant

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The CouncilsKnowledge Network
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Why Innovation?

• Innovation remains the principal driver of
• Productivity
• High standard of living
• Job creation

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The Path to Prosperity
Prosperity
Competitiveness(Productivity)
Innovation
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Global economy is at an inflection point Group of
innovator nations growing / Science, technology
and talent available globally
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Pace of innovation quickening
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Job Creation Globally

• Global projections
• 91 million jobs created over the next ten years.
• Over 5 million jobs in 2004.
• Where will the jobs be created?

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U.S. Job Growth During Economic Recoveries
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Innovation fosters new ideas, technologies, and
processes that lead to better jobs, higher wages,
and a higher standard of living. For advanced
industrial nations no longer able to compete on
cost, the capacity to innovate is the most
critical elemental in sustaining
competitiveness. --We must optimize our entire
society for innovation--
Vision Statement National Innovation Initiative
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NII Principals Committee
Co-Chairs Samuel J. Palmisano,IBM Corporation
G. Wayne Clough, Georgia Institute of Technology
Gerard J. Arpey, president and CEO, American
Airlines Lee Bollinger, president, Columbia
University Molly Corbett Broad, president,
University of North Carolina Mary Sue Coleman,
president, University of Michigan Denis A.
Cortese, president and CEO, Mayo Clinic Robert M.
Gates, president, Texas AM University Sheryl
Handler, president and CEO, Ab Initio John L.
Hennessy, president, Stanford University Shirley
Ann Jackson, president, Rensselaer Polytechnic
Institute Vikram Pandit, co-president and COO,
Morgan Stanley Steven S Reinemund, chairman and
CEO, PepsiCo, Inc. W. J. Sanders III, founder and
chairman emeritus, AMD Kevin Sharer, CEO,
Amgen Ivan G. Seidenberg, chairman and CEO,
Verizon Charles M. Vest, president, Massachusetts
Institute of Technology G. Richard Wagoner,
chairman and CEO, General Motors
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Goals for the NII

• Bring together Americas top minds on innovation
• Sharpen our understanding of how the innovation
  process is changing and how it can be harnessed
  for economic growth
• Look beyond the traditional tools for economic
  stimulus (monetary and fiscal policy)
• Advocate a strategic, actionable agenda to create
  a fertile environment for innovation. One that
  respects the right and values the participation
  of other nations in this space.

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What is Innovation?

• Invention and applications of semiconductors.
• New teaching methods
• Manufacturing breakthroughs.
• We must create an environment in which innovation
  can thrive.

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National Innovation Initiative

• Talent

• Investment

• Infrastructure

• Help markets place top value on long-term
  innovation strategies
• Establish incentives to increase early-stage
  investment in small-business innovation
• Invest to accelerate innovation in the services
  economy

• Transportation, information, healthcare and
  energy
• Drive regulatory and legal systems to better
  support innovation and entrepreneurship
• Build a system that protects the rewards of IP,
  but that also encourages open collaboration

• Develop a diverse, world class, next-generation
  of innovators
• Establish a National Innovation Prize
• Make the US a magnet for the best global talent

• Establish innovation metrics for the knowledge
  economy, not the industrial economy

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Globalization Creates an Innovation Challenge and
Opportunity

• Challenges may differ in Mexico, but the goals
  remain the same.
• Council is committed to an international dialogue
  with our counterparts abroad to enhance global
  investment, trade and prosperity.
• U.S. and Mexico must cooperate to achieve
  innovation success.

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Globalization Creates an Innovation Challenge and
Opportunity (cont.)

• Skilled workers and students are a global
  resource.
• The efficient and secure flow of goods and ideas
  across borders is critical.
• Innovation can occur regionally, nationally and
  internationally.
• Regions do not have to be limited by borders.
• We must work together to educate policymakers on
  the importance of innovation-led growth.

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Expanding the Council Model Abroad

• The Councils model of industry, university and
  labor working together to increase productivity
  and improve our standard of living is a powerful
  model of collaboration that enhances the nations
  innovation system and strengthens economic
  competitiveness.

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Councils Mexico Initiative Council - IMCO
partnership

• US-Mexico Partnership for Prosperity
• In 2002, a group of leading Mexican
  industrialists, led by Tomas Gonzalez Sada,
  approached then-Council chairman Raymond
  Gilmartin, CEO of Merck, to gain support for the
  establishment of a Mexican Council on
  Competitiveness. In follow-up meetings, we
  agreed that the two Councils would meet regularly
  to discuss issues affecting productivity growth
  and prosperity in both nations.

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A Reliance on Low Cost Labor is Unsustainable

• Increased global competition from China and
  others.
• Globalization means there is always someone
  offering a lower cost.
• To compete need to offer a package deal
  Talent, Investment Infrastructure

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