Chapter 1

Harnessing the New Geometry of Innovation

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Chapter 1

The United States almost missed the strategic significance of developments in microelectronics, 5G, and AI – the current three biggest tech battlegrounds – because no one in government was responsible for identifying strategically relevant technologies and making sure the United States had a plan to build them. The battlegrounds are at-once competition stories, prerequisites for future technology sectors, and microcosms of bigger issues confronting the nation. They reveal that the United States still has no process or person responsible for achieving technology advantage. Going forward, America must be able to get ahead of the target in defining critical technologies. Looking to 2030, the United States must both maintain its focus on microelectronics, wireless networks like 5G, and AI, and prepare to act on still-emergent sectors – “the next 5Gs” – that will reshape our lives and drive long-term competition with China.1 Doing so requires mastering the new geometry of innovation.

Following the Second World War, the United States seized a lead in advanced technologies by understanding and leveraging the scientific and industry landscape. Guided by Vannevar Bush’s vision in “The Endless Frontier,”2 a knowledge-generating triangle of government, academia, and industry carried us to the moon,3 seeded Silicon Valley,4 and created the Internet.5 Yet, in only a few decades that triangle began to evolve, and the role of government in setting and driving the agenda for new scientific frontiers began to diminish. Silicon Valley and modern venture capital grew into a force of its own.6 More recently, the information age opened the door to a fifth player – “the crowd”7 – that has bolstered individualized capacity to provide sources of funding8 and driven new research outside of traditional institutions.9 The innovation landscape has changed, but thus far America has not fully adapted.

In isolation, the United States’ failure to respond to the changed geometry of innovation would be unfortunate. In an international competition, it is a strategic vulnerability. The United States confronts a highly organized rival with a similarly sized economy that is tightly interwoven with its own.10 The competition’s stakes are high, and the market alone has not naturally aligned with the nation’s needs for that competition. Absent targeted action, the United States is unlikely to close the growing technology gaps with China by a strategy of chance. The U.S. public-private ecosystem has vast competitive strengths, but they are ungathered. America needs a plan for mastering the new geometry of innovation to compete.

A new public-private model would recognize the five power centers driving innovation and seek to harness them to gain advantage. The nation needs a process that puts that public-private model into action.

The U.S. public-private ecosystem has vast competitive strengths, but they are ungathered. America needs a plan for mastering the new geometry of innovation to compete.

The Process. A national technology strategy process would unlock America’s latent power to compete in the sectors that mater most, enhancing the United States’ position while drawing on American strengths and remaining consistent with American norms.

  • The United States must build a national process for horizon scanning for emerging technologies and rivals’ strategies that draws on a range of experts. Absent an international competition, recognizing innovation is important. In an international competition, it is vital. America possesses vast horizon scanning talent across academia, industry, and government, but it has yet to link those expert nodes into a network that supports national goals.
  • The United States must curate national action plans for strategic technologies that set bold technology goals and prime the ecosystem for diffusion and adoption. The nation needs an integrated process for evaluating necessary moves by creating “minimum viable solutions” that push beyond merely composing lists of important technology sectors toward concrete achievements and plans that benefit the entire nation – and often the broader world.
  • The United States must marshal public, private, and public-private resources to put the appropriate focus behind bold technology goals. Many in the innovation ecosystem are waking up to the international competition and the risk that the United States may lose in it. The government and private sector can harness this latent potential to gain leverage in the international competition.

Even if this process represents the right equation for regaining tech advantage, the United States lacks a hub for implementing this process to devise and enact long-term technology strategy. The United States needs an organization that can lead in this effort by providing an action arm that is accountable, capable, and lasting.

National Technology Strategy Process

A Framework for Ascertaining a Technology’s Strategic Significance

The nation requires a process for identifying and teeing up action on a select number of strategically significant technologies.

In international competition, nations unable to identify and prioritize strategic technologies for action will fall behind and suffer from the resulting vulnerabilities. Spurring select action plans that mobilize the ecosystem towards a positional advantage can help address novel threats from abroad, seize raw opportunities, and explore novel paradigms that change the way that the nation – and the world – performs scientific discovery, technology, and engineering. The path to action begins with a framework – shown below – that provides a nuanced, but accessible, lens for policymakers to find strategic signal amid the noise.

In international competition, nations unable to identify and prioritize strategic technologies for action will fall behind and suffer from the resulting vulnerabilities.

Defining essential national technology goals and marshaling resources for a technology move starts with understanding the technology itself. As the box on the left in the graphic below outlines, a set of technology questions helps assess an emerging technology’s capacity to drive broader, fundamental change, and its potential impact on the economy, national security, and social structures. Next, as crafting a strategy in a resource-constrained world demands prioritization, a technology strategy framework considers rivals’ positioning (middle box). A rival’s lead – or possession of the resources, talent, and will to lead in a strategic technology – heightens the urgency of competing in that space. Finally, the framework looks inward (box on the right), probing the U.S. and allied ecosystems to understand their current state and needs for maintaining, bolstering, or supercharging American competitiveness through partnerships, investment, and harmonizing the regulatory and innovation environments.

Altogether, this framework provides a template for sorting strategic signals from noise in a time when multiple technologies are advancing and converging, and a rival is determined to overtake the United States as the world’s technological powerhouse. Policymakers should not expect a signal to emerge based on specific answers to each question or reaching a certain threshold of particular answers. Rather, the framework sets a process for interrogating technologies to draw out their national significance, potential role in the competition, and the actions for catalyzing advantage. Ultimately, it is the responsibility of policymakers to make judgments by assessing the framework’s answers in light of contemporary strategic circumstances.

Studying the Horizon

Unifying public and private actors to fill national technology gaps and seize opportunities requires a systematic approach to scanning the technology horizon.

The capacity to put a stethoscope to the U.S. commercial ecosystem is the prerequisite for developing a technology strategy. As the sources of innovation evolve, the U.S. Government requires new approaches for maintaining awareness of the technologies that can reshape the world. In an international competition with a rival that systematically studies the global technology ecosystem, awareness is the first step in avoiding falling behind in strategic technologies.

In an international competition with a rival that systematically studies the global technology ecosystem, awareness is the first step to avoid behind in strategic technologies.

A systematic approach, using the framework outlined above, would empower an entity with a whole-of-nation mandate that sits at the center of a network of horizon scanners, continuously tracking and assessing the technological realm of the possible, the players in the innovation ecosystem, and the potential holes that could have profound impacts. That network of horizon scanners should include and leverage those incubators and startups that are tackling some of the “toughest tech” but who are outside the traditional government innovation ecosystem.11 Additionally, collaboration with similar entities in partner governments, from Japan to the United Kingdom (UK), India, and Israel, can help inform national technology policies.12

The necessary elements are already in place. America possesses immense talent in this space – horizon scanning elements already exist everywhere from investment banks and think tanks to universities and venture capital funds.13 Folding voluntary private sector experts into an unclassified strategy process that produces “business intelligence” would mark a step change in the U.S. understanding of international rivals.14

Curating the Platforms of the Future

Achieving national technology goals requires action plans that consider both the technology itself (its maturity, development pathway, and hurdles to viability) and the factors in its broader ecosystem that would enable it to scale, deploy, and commercialize.

Curating a national technology move requires an action plan that facilitates taking a technology from concept to reality. While pure discovery remains crucial, in an international competition leadership derives from national ecosystems that can scale, deploy, and commercialize the technologies with potential to change the world.15 Action plans seek to nudge loose innovative potential from status quo constraints, whether due to misaligned commercial incentives, regulatory hurdles, talent shortages, or other challenges.

An action plan must see a technology’s role in the market, particularly its commercial purpose and user base. Some technologies, such as hypersonic weapons, are the exclusive purview of governments and require the state to create and sustain the demand. In other cases, the state need not permanently maintain the market, but only provide a minor nudge, such as the Defense Advanced Research Projects Agency (DARPA)’s 2004 “grand challenge” on autonomous driving that helped spur the current wave of innovation in autonomous vehicles.16 Thus, an action plan must begin by understanding a technology within its development and commercial context.

While pure discovery remains crucial, in an international competition leadership derives from national ecosystems that can scale, deploy, and commercialize the technologies with potential to change the world.

An action plan seeks to create a minimum viable solution for realizing a technology on a national scale. Developing such a plan requires two levels of analysis. First, a nation must map the technology pathway17 for leadership in a specific platform or sector. An action plan’s scope and scale depend on the technology’s current readiness level.18 A plan must identify technical hurdles to viability, whether in concept, design, or scaling, before determining the type and level of necessary assistance.

Second, a national action plan must understand an emerging technology’s surrounding ecosystem. Here consulting with actors across government, academia, industry, and civil society can help identify what types of government or private interventions could prevent or fill holes in the innovation ecosystem. A comprehensive understanding of the ecosystem also requires mapping factors that are exogenous to the core innovation, but necessary for its full realization, such as public infrastructure, the regulatory environment, the capacity to produce the product at scale, and required resources and supply chains. A full action plan thus marries a technology path to a broader techno-industrial strategy for the ecosystem.

Mobilizing the Entrepreneurs of American Advantage

To best challenge China’s fused public-private innovation ecosystem, America requires a more coordinated whole-of-nation effort to energize its own innovation ecosystem toward developing positional advantage in strategically significant technologies.

Recognizing key technologies and building an action plan are necessary steps, but the U.S. ecosystem must actually act. To best compete, the United States must recognize and work to close holes in its innovation ecosystem, particularly concerning “deep tech,” to fully harness latent potential.19 Mobilizing a whole-of-economy effort requires matching the power of China’s fused system, but doing so by drawing on American strengths, not mimicking China’s state-centric, authoritarian approach.

Currently, the U.S. innovation ecosystem is under-performing for five reasons:

  • High costs/risks lessen investment in certain strategic technologies. Recently, high capital costs and risks have prompted firms to avoid certain fields, particularly hardware like semiconductor production,20 that geopolitics have made strategic needs.21
  • Certain regulatory hurdles can encumber viable technologies. Regulation that is outdated, inconsistent across jurisdictions, or inadequately reflective of externalities can hamper the testing, scaling, and commercialization of even proven technology.22
  • Uncertainty on necessary accompanying innovations or infrastructure can chill investors or limit scalability. If a component of the ecosystem necessary to support a technology seems implausible or an essential update to public infrastructure seems unlikely, innovation can be stranded.23
  • Outdated acquisition models deny government leading technologies. Federal acquisition is not geared for purchasing leading commercial technologies, reducing access to new systems. Relationships with legacy industry gatekeepers also crowd out new innovators.24
  • The need for trusted capital flows. A small subset of capital from select malign foreign actors can distort U.S. markets by facilitating technology transfer or artificially driving up U.S. firms’ valuations, interfering in the investment market.25

Mobilizing a whole-of-economy effort requires matching the power of China’s fused system, but doing so by drawing on American strengths, not mimicking China’s state-centric, authoritarian approach.

An enhanced public-private model would overcome these challenges to unlock latent national potential by:

  • Systematically expanding the volume and coordination of information sharing. Voluntary information sharing cannot only create positive loops between government and the private sector, but also spur greater private-to-private awareness and cooperation.
  • Creating markets in strategic areas. The Government can help identify strategic technology areas and incentivize private investment and action. Incentives can come in setting moonshots,26 regulatory updates,27 de-risking investment,28 or a targeted technology fund.29
  • Improving government-wide fast-tracks for acquiring new technologies. Acquisition reform should focus on purchasing for innovation. In a contest of judging how well governance models deliver, America cannot afford to compete with legacy equipment.
  • Mapping the long-term resource ecosystem. The U.S. Government and private sector firms can help each other see resource and supply chain risks. Mapping long-term needs avoids the trap of inaccurate predictions.30
  • Certifying trusted capital. Beyond the Committee on Foreign Investment in the United States (CFIUS), which some investors in early-stage firms have limited exposure to, an information sharing initiative that certifies “trusted capital” could help reduce risks and lower transaction costs for early-stage investors, particularly when acting across different investment communities, by providing an additional reassurance that a promising project did not involve malign foreign capital.
  • Scaling successful models at innovation hubs around the nation. The nation should learn from and, where appropriate, replicate a new generation of technology incubators focused on “deep tech.”31

Together, these lines of effort can further strengthen an already robust American model. They require, however, an organizing force to maximize the chance for successful implementation.

Organizing the Government-Private Sector Nexus

Today’s techno-economic competition demands organizational reform to coordinate a new public-private partnership model and implement the outlined technology strategy process.

The preceding process requires an institutional home to make a new public-private model a reality for sustained long-term technology competition. Ideally, such an entity would serve three core functions: coordinate between public and private stakeholders – and across government actors; provide analytical capacity to inform policymakers; and operate as an action arm, implementing action plans to push strategic technologies forward. Such an entity would also ensure coordination between the action plans and a broader, national techno-industrial strategy.32 Several options merit consideration.

The executive branch could elect to create a technology competitiveness hub by executive order. As the case of the National Economic Council (NEC) illustrates, presidents have taken it upon themselves to create new organizational capacities to meet changing global circumstances.33 Similarly today, the President could determine that international competition requires a focal point in the executive branch that could support senior leadership engagement with the private sector, the coordination of information flows for presidential-level decisions, and accountable implementation of a technology strategy process.

Alternatively, a technology competitiveness hub could be deemed essential and relevant legislation could be passed establishing an office(s) in the executive or legislative branches. The National Security Council (NSC), today a principal tool for the President within the Executive Office of the President, was mandated by legislation.34 A legislative grounding helps ensure an entity’s staying power when compared to functions created at the President’s discretion, reducing its exposure to political whim. Currently, legislative proposals for a Technology Competitiveness Council (TCC) and an Office of Global Competition Analysis (OCA) are under consideration and are worthy of study.35 A legislative branch agency, like the Congressional Research Service,36 or a federally funded research and development center (FFRDC),37 could fulfill many of the analytical functions, as well as the information sharing dimension of coordination. However, a legislative branch agency or FFRDC would be more limited in its ability to implement policy, which is a function of the executive branch.

Finally, should governmental action be stymied, a public-private partnership could pick up the torch to provide analysis and serve as a convening center for information sharing. Though also limited in its capacity for implementation, a nongovernmental entity, including an FFRDC,38 could offer advantages of independent research and analysis, intellectual consistency across administrations, and “neutral ground” that fosters access to government without being “of government.”

Ultimately, the three preceding approaches are not mutually exclusive. The American innovation ecosystem is a complex and multifaceted domain. It brings together a host of actors — from innovators and academics to investors, regulators, and the crowd. So too might a successful organizational paradigm draw on the executive branch, legislative branch, FFRDCs, and new public-private organizations to best align the nation to compete.

1. For more on still emergent tech sectors see Chapter 7 of this report.
2. Vannevar Bush, Science: The Endless Frontier, National Science Foundation (1945).
3. Arnold Levine, Managing NASA in the Apollo Era, National Aeronautics and Space Administration at 71 (1982).
4. Margaret O’Mara, The Code: Silicon Valley and the Remaking of America, Penguin Press at 17-29 (2019).
5. From ARPANET to the Internet, Science Museum (2018).
6. Margaret O’Mara, The Code: Silicon Valley and the Remaking of America, Penguin Press at 204-205 (2019); Sebastian Mallaby, The Power Law: Venture Capital and the Making of the New Future, Penguin Press at 18-19 (2022).
7. Clay Shirky, Here Comes Everybody: The Power of Organizing Without Organizations, Penguin Press (2008).
8. Holly Else, COVID “Fast Grants” Sped Up Pandemic Science, Nature (2021); Tyler Cowen, et al., What We Learned Doing Fast Grants, Future (2021).
9. Sarah Hamburg, A Guide to DeSci, the Latest Web3 Movement, a16z Futures (2022).
10. See Andrew Krepinevich, Preserving the Balance: A U.S. Eurasia Defense Strategy, Center for Strategic and Budgetary Assessments at 38-39 (2017).
11. See e.g., Katie Rae, Tough-Tech Landscape, The Engine (2021).
12. NISTEP Report No. 183, The 11th Science and Technology Foresight: S&T Foresight 2019: Summary Report, National Institute of Science and Technology Policy, Tokyo (2019); Horizon Scanning Programme Team, Government of the United Kingdom (last accessed 2022); Horizon Scan 2050 A Diferent View of the Future, Stichting Toekomstbeeld der Techniek (2014); Foundation for the Future of Technology, Stichting Toekomstbeeld der Techniek (last accessed 2022).
13. Examples of horizon scanning initiatives in government, think tanks, and the private sector include the Department of Homeland Security’s Tech Scouting and Transition Division, the Atlantic Council’s Emergent Futures Lab, and Deutsche Bank’s insights shared in its Horizon Scanning podcast. See Horizon Scanning, Department of Homeland Security (2022); Emergent Futures Lab, Atlantic Council (2018); Horizon Scanning, Deutsche Bank (last accessed 2022).
14. For other elements on how to address this challenge, see Chapter 6 of this report.
15. Jefrey Ding, The Rise and Fall of Great Technologies and Powers (2021).
16. This framing outlining four types of markets for technologies is inspired by SCSP’s May 2022 engagement with a leading technologist. The four types include: (1) instances where the market functions on its own; (2) instances where the market requires a minor governmental nudge; (3) instances where the market requires substantial (and possibly permanent) governmental engagement; and (4) instances where the private sector recognizes new technological challenges/opportunity of which the government is not aware. See also The Grand Challenge, Defense Advanced Research Projects Agency (last accessed 2022).
17. These pathways can be charted from a future goal backwards (“back-casting”) or via a projection from the current state (“tech trees” or “tech vectors”). See Simon Elias Bibri, Backcasting in Future Studies: A Synthesized Scholarly and Planning Approach to Strategic Smart Sustainable City Development, European Journal of Futures Research at 10-12 (2018); Aaron King & Allison Duetmann, Growing Tech Trees for Longevity, Molecular Machines, Neurotech, Computing, and Space, Foresight Institute (2021).
18. The concept of “technology readiness levels” was originated by NASA but has become more widely used. See Technology Readiness Level, NASA (2021); ISC Technology Readiness Level Scale, Government of Canada (2020).
19. “Deep tech” portends a large impact, but requires “a long time to reach market-ready maturity” and significant “capital to develop and scale.” Massimo Portincaso, et al., Deep Tech Ecosystems, Boston Consulting Group (2019).
20. On a growing reluctance to invest in hardware-intensive technology, see Josh Lerner & Ramana Nanda, Venture Capital’s Role in Financing Innovation: What We Know and How Much We Still Need to Learn, Harvard Business School Working Paper Working Paper 20-131 at 9 (2020). Chapter 2 of this report discusses the case of semiconductors in further detail.
21. Julian Kamasa, Chip Shortages in the Light of Geopolitics and Climate Change, Center for Strategic and International Studies (2022); Shane Tews, et al., The Geopolitical and National Security Implications of Computer Chips: Highlights from a Conversation with Chris Miller, AEIdeas (2022).
22. See Travis Brown, 50 States of Chaos: Patchwork Regulation is Crippling Tech Innovation, Forbes (2014).
23. For instance, a lack of public investment in the U.S. rail networks have contributed to the minimal development of the U.S. high speed rail sector, particularly compared to international leaders. Natasha Frost, A Decade Ago, the US was Promised High-speed Rail – So where is it?, Quartz (2020); Ben Jones, Past, Present and Future: The Evolution of China’s Incredible High-speed Rail Network, CNN (2022).
24. SCSP Platforms Panel Meeting (May 2022). See also Christopher Kirchof, Reshaping National Security Institutions for Emerging Technology, Aspen Institute at 92 (2016) (paper within America’s National Security Architecture).
25. SCSP Platforms Panel Meeting (May 2022). See also Michael Brown & Pavneet Singh, China’s Technology Transfer Strategy: How Chinese Investments in Emerging Technology Enable A Strategic Competitor to Access the Crown Jewels of U.S. Innovation, Defense Innovation Unit Experimental (2018); Sean O’Connor, How Chinese Companies Facilitate Technology Transfer from the United States, U.S.-China Economic and Security Review Commission at 4-7 (2019).
26. Scot Anthony & Mark Johnson, What a Good Moonshot Is Really For, Harvard Business Review (2013); Astro Teller, Google X Head on Moonshots: 10X Is Easier Than 10 Percent, Wired (2013). As a recent example, in 2022 President Biden reinitiated the national cancer moonshot. Cancer Moonshot, National Cancer Institute (2022).
27. James Pethokoukis, Is Regulation Slowing Tech Progress and Innovation? A Long-read Q&A with Eli Dourado, AEIdeas (2016); Larry Downes, Fewer, Faster, Smarter, Democracy (2015); Travis Brown, 50 States Of Chaos: Patchwork Regulation Is Crippling Tech Innovation, Forbes (2014).
28. SCSP Platforms Panel Meeting (May 2022). See also Livio Valenti, et al., Deep Tech Entrepreneurship: From Lab to Impact, Belfer Center for Science and International Affairs at 8 (2022); Massimo Portincaso, et al., The Deep Tech Investment Paradox: A Call to Redesign the Investor Model, BCG at 15-16 (2021). Notable current government investment programs include defense-oriented investment entities like the Air Force’s AFWERX and the Small Business Administration’s Small Business Investment Company program. About Us, AFWERX (last accessed 2022); SBIC Program Overview, Small Business Administration (2018).
29. Such a fund could work as an “OCO for critical technology.” On the Overseas Contingency Operations fund (OCO), see Brendan McGarry & Emily Morgenstern, Overseas Contingency Operations Funding: Background and Status, Congressional Research Service (2019).
30. SCSP Platforms Panel Meeting (May 2022). See also Willy Shih, Global Supply Chains in a Post-Pandemic World, Harvard Business Review (2020).
31. The U.S. innovation ecosystem is home to a variety of types of technology incubators. An emerging class of incubators that focus on “tough/deep tech” that is often hardware-intensive or possessing a long timeline already are creating results in this area that has received insufficient focus and support. Josh Lerner & Ramana Nanda, Venture Capital’s Role in Financing Innovation: What We Know and How Much We Still Need to Learn, Harvard Business School Working Paper Working Paper 20-131 at 9 (2020). The Engine and the growing Hacking for Defense network reflect two models worthy of further study. See e.g., Our Mission, The Engine (last accessed 2022); Hacking for Defense, H4D (last accessed 2022).
32. For more on techno-industrial strategy, see Chapter 2 of this report.
33. Executive Order 12835, Establishment of the National Economic Council, The American Presidency Project (1993). The NEC responded to changing international conditions as it sought to unite “international and economic policy” in a single forum. Sarah Rosen Wartell, National Economic Council, Change for America at 16 (2008).
34. Pub. L. 80-253, The National Security Act of 1947 (1947); Kathleen McInnis & John Rollins, The National Security Council: Background and Issues for Congress, Congressional Research Service at 5-7 (2021).
35. In 2022, Congress considered legislation for both a Technology Competitiveness Council (TCC) and Ofice of Global Competition Analysis (OCA). H.R. 8027, To Establish within the Executive Office of the President a Technology Competitiveness Council (2022); Courtney Albon, Lawmakers Propose ‘Technology Competitiveness Council’ to Champion US Innovation, C4ISRNet (2022); S. 4368, American Technology Leadership Act of 2022 (2022); Daniel Flatley, Senators Wary of China’s Tech Prowess Seek Competition Office, Bloomberg (2022). The NSCAI recommended creating a TCC in its final report in 2021. Final Report, National Security Commission on Artificial Intelligence at 166 (2021). A combination of a TCC and an OCA could be a powerful duo in advancing U.S. organizational capacity to compete. OCA – housed in the Executive Office of the President, an executive agency, or an FFRDC – could provide analytical capacity for senior policymakers while remaining insulated from the momentary political pressures and ensuring intellectual memory across administrations. Complementary, a TCC located in the White House would offer both a key point of engagement between governmental leaders and the private sector and an action arm for pursuing action plans and moving the national innovation ecosystem.
36. The Congressional Research Service is an example of a legislative branch agency established by statute but situated in the legislative branch to provide research and analysis. See Ida Brudnik, The Congressional Research Service and the American Legislative Process, Congressional Research Service (2011).
37. See Marcy Gallo, Federally Funded Research and Development Centers (FFRDCs): Background and Issues for Congress, Congressional Research Service at 4 (2021).
38. While Congress could create an FFRDC by legislation, legislation is not necessary to create a new FFRDC. The “Federal Acquisition Regulation system (FAR) governs the establishment, use, review, and termination of FFRDCs.” Marcy Gallo, Federally Funded Research and Development Centers (FFRDCs): Background and Issues for Congress, Congressional Research Service at 4 (2021).

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