What Happened to Innovation?

I remarked on this to McKenna, reminding him that 15 years ago he warned me that the U.S. wasn't making sufficient investment anymore into basic scientific research, that we were "eating our seed corn," and living off the hard work done in solid state physics, fiber optics and networks decades before. Perhaps, I told him, we are looking at evidence that his worst fears have come true.

McKenna didn't entirely agree, suggesting that some of today's tech innovation is simply less visible, not hardware but software code and clever new algorithms.

Perhaps, but I'm not convinced.

After all, it seems to me that even in software, most of the really important innovation happened, as well, during those 10 years beginning in the mid-'60s, as well as before that during the mainframe computer era.

What software innovation we're seeing today is largely in the form of applications … and one would be hard-pressed to name, say, an iPhone app that will leave its mark on history the way the vacuum tube or oscilloscope did.

What didn't need to be said between us -- McKenna is, after all, a veteran angel investor in new tech start-ups -- is that, between growing government regulation and the current economic crisis, there simply isn't money out there to finance the next generation of hot new entrepreneurial start-ups and high-risk corporate "skunkworks" projects that produce the really great inventions and products. Venture capitalists these days are running scared, their business model ruined in a world without initial public offerings, putting their money in only the safest, low-risk/low-return deals. And that isn't how you fund the next tech revolution.

A Future in Medical Tech?

By coincidence, a couple days later, I had lunch with another Silicon Valley pioneer and legend, Federico Faggin, co-inventor of the microprocessor and the man behind the computer touch pad on which my thumb now rests.

I told him about my surprising findings with the timeline. Is it possible, I asked, that I was missing something? Yes, said Faggin, you need to keep in mind that most of the sectors of what we consider to be electronics, such as semiconductors, have already passed through their phases of great innovation and are now mature industries dedicated to perfecting their inventions, not replacing them. Where you should look now, he suggested, are in places like nanotechnology, biotech and medical technology that are still on the steep part of the innovation curve.

Once again, perhaps. But even if that is true, I don't find it particularly consoling about our future. For one thing, are those industries of sufficient size and importance to make up for the stagnation of all of the rest? Can they keep our economy healthy and vital?

Now, add to this the fact that these new industries are hardly immune to the dry-up of capital taking place everywhere else -- not to mention the loss of the crucial liquidation event once made possible by "going public" -- and it is hard to see how, no matter how creative their scientists and entrepreneurs, those businesses are going to fund the great innovations that are supposed to lie in their futures.

Even more disturbing is the possibility that this economic downturn will be dragged out through mismanagement by Washington, while other, more rapidly recovering, nations such as China (which applied its stimulus package quickly and decisively) will use the opportunity to race ahead.

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