RECHARGEABLE
BATTERIES AND COLLABORATIVE KNOWLEDGE
The Next
Frontiers of Financing Science and Post DotCom Venture Capital
Digital Notes for a Lecture at McGill on Commercialization
of Technology for Graduate Science and Medicine Students
Course on Innovation
March
4, 2003
Jim
de Wilde (jim_dewilde@yahoo.ca)
Dr.
Jim de Wilde is President of JdW Strategic Ventures which
assists financial institutions in designing venture capital
strategies and, as a private investor, has worked on and
served on the Boards of a number of companies resulting
from the commercialization of technology. He is on the Advisory
Board of the RBC Capital Markets Technology Fund, Fusion
Capital (Toronto) and the investment committee
of MSBI (Montreal). He teaches
venture capital strategies at the Rotman School of Business
at the University of Toronto and has been on the faculty
of the Business School at McGill, where he is now
a Dobson Fellow and the Ivey School of Business at
the University of Western Ontario.
The words innovation and invention are around us always.
Now we have a global economy where a significant ingredient
of prosperity is the alchemy for turning knowledge into
value. The commercialization of technology is
central to national and regional competitiveness. The search
for innovation strategies often confuses invention, innovation
and the commercialization of knowledge or technology and
I want to be very careful today to maintain a distinction
between these categories despite their potential to overlap.
.
In Canada today,
it is imperative that we start to develop innovation strategies
which make the Canadian economy a magnet for innovative
ideas that can be commercialized in a Canadian network.
This is a challenge which will determine our competitiveness,
our nation prosperity and the meaning of our sovereignty
in a global knowledge economy. Today, I want
to set out a framework for an innovation strategy for Canada
by looking at some of the next frontiers for venture capital
and by assessing the art of transforming knowledge
into value through creative financial engineering and focused
managerial excellence. In this manner we can
build a knowledge economy in Canada
where people can come from all over
the world to do world-leading research, commercialize it
and develop companies around entrepreneurially-led sources
of specialized excellence.
Let me start with four case studies:
CASE
STUDY A: Scientific publishing as an investment.
The
Gordon and Betty Moore Foundation (established by the founder
of Intel and his wife), have just backed Nobel Prize winner
Harold Varmus in a form of distributive knowledge that allows
for a business model in scientific publishing.
The open-source revolution and the somewhat Scandinavian
notion that all knowledge belongs to everyone has collided
with an intellectual property-driven global economy to create
some extraordinary new business models, from Lego to Linux,
where collaborative learning has the potential to create
new sources of value organized through the internet.
At one of the frontiers of venture capital interest these
days are Linux-applications, distributive software, collaborative
learning, data-mining, knowledge management software and
the transformation of embedded information into commercial
value. This has led to business
models like Groove
and the marketing of consumer data and epidemiological data
as products. Information is a commodity;
knowledge management a business. In this environment
the search for a new business model for scientific publishing
becomes an exciting and important area at one of the frontiers
of venture capital.
CASE
STUDY B:
Indian IT and NASSCOM (www.nasscom.org)
as a global partner.
The
development of the outsourcing of IT management cluster
in southern India
is a much recognized reality of the global marketplace in
the last couple of years. NASSCOM, the Indian industry
association, is a significant part of the new global knowledge
commercialization network. The Bangalore-Hyderabad-Mumbai
networks have created a business model of "contingency cooperation"
and high quality innovation in the management
of largescale information technology needs.
From an investor's point of view, finding a blue-chip mechanism
for investing in the start-up companies within the South
Asian cluster remains an interesting challenge.
The manner in which these investments are made and the links
to other economies will become one of the defining characteristics
of a renewed global economy in technology in the early 21st
Century. It also means that the alchemy of turning
knowledge to value requires building knowledge hubs that
are connected to new organizational models in Bangalore
(and in Oulu, St. Petersburg, Zurich, Austin,
Charlotte, Copenhagen and the other parts of a growing global
knowledge economy made possible by the realities of the
internet).
CASE
STUDY C: The battery as a key to innovation.
Commercializing
electrochemistry research will lead to profitable investment
opportunities. The search for portable
energy, rechargeable batteries and the creation of wire-free
electricity will unleash great environmental opportunities
and become a disruptive technology. Venture
capitalists have known this for a decade, but there has
been no "Microsoft" of rechargeable power, no "Lotus" of
micro-fuel cells or microturbines. Obviously,
if it was easy to create such a business strategy, venture
capital would have done it by now.
The federal government is committed to making Canada
a world leader in alternate energy, but how do we create
the cluster of research, sophisticated investment, coordinated
of academic research and entrepreneurial genius to make
such a disruptive technology possible, and possible in Canada?
The Wall Street Journal reported recently on the industry
structure of this sector. Companies like MobileWise (www.mobilewise.com)
and MTI MicroFuel Cells (www.mtimicrofuelcells.com)
are attempts to build expertise in this space, but the sector
has remained stalled for years. A decade ago, Valence
was a Barron's cover story (www.valence.com).
It has not remade the battery sector and the interrelationship
between batteries, rechargeable power, utilities and portable
energy remains one of the most exciting scientific activities
around. What has stopped the
development of this sector and how could a Canadian
strategy succeed in building world-class specialized excellence
in rechargeable power in Canada?
CASE
STUDY D. Envirogenomics has become a new
scientific discipline.
What
is it that explains why only a minority of people exposed
to a toxic waste develop cancer? What explains variations
and adaptations to external chemical agents?
The intersection of traditional modes of inquiry to create
new disciplines requires a different approach to the organization
of knowledge and to the financing of research than exists
in the neat boxes of physics, biology and chemistry as scientific
disciplines. The National Institute of
Environmental Health Sciences (www.niehs.nih.gov)
in the research Triangle Park in North Carolina is a case
study of the possible strategy of creating concentrated
areas of expertise to break through in new areas,
a series of mini Manhattan projects to make possible a new
form of collaboration.
I
raise these case studies to give a framework for discussing
innovation strategies and venture capital opportunities
in the development and commercialization of new knowledge.
The first pair of case studies is about innovation and the
distribution of knowledge. Case a (Scientific Publishing)
is concerned with the commercial opportunities emerging
from a market in information and designing a new economics
of knowledge and science. Case B (The Indian IT
market in outsourcing) is about creating a global network
which can facilitate the comparative advantages of distributing
and organizing knowledge in different economies with different
capacities. It emphasizes the importance
of developing a strategy based on commercializing domestic
sources of innovative excellence as opposed to copycat strategies
which attempt to do what can more efficiently be done elsewhere.
The
second two are about the commercialization of knowledge:
Case C (Rechargeable Batteries) is about how electrochemistry
science can be commercialized to create rechargeable power,
why the economic dynamics for this have not transpired,
and the obstacles to creating such a cluster in Canada.
Case D (Envirogenomics) is about how to organize
scientific research around emerging areas of knowledge where
collaborative research can provide a competitive advantage
and, possibly, a network which can be commercialized.
SCIENTIFIC
PUBLISHING AS A VENTURE CAPITAL OPPORTUNITY: COLLABORATIVE
KNOWLEDGE, OPEN-SOURCE SYSTEMS, SCIENTIFIC PUBLISHING
AS A GROWTH INDUSTRY
:
There was a time when one could talk about the distribution
of knowledge as "education" and the creation of knowledge
as "research". An educated
society is innovative. Scientific literacy is
a competitive advantage which is evident when one travels
to Sweden or Finland.
Organizing knowledge and information has now become a significant
industry, whether in financial services (as evidenced by
the competitive struggle between Bloomberg and Reuters)
or in the intersection of media and education in the emerging
competitive market in educational technologies.
The process of turning knowledge into value is a cornerstone
of a competitive society. The new economics
of distributing knowledge has created a number of business
opportunities and business models.
There
was some perceptive comment on the decline of Linux-based
companies (one of the great moments in new economy hype)
which said, in effect, "so much for companies whose business
models are to give away their intellectual property".
Now, we are starting to understand that there are ways that
collaborative knowledge can be profitable, the recognition
in the example of the Icelandic genomic data-base Decode
(www.decode.com)
which recognizes that we own our DNA and can be compensated
for its scientific use. To be effectively compensated,
a new investment entity had to be created, but this worked.
Similarly, value is being created from aboriginal medical
knowledge, as reflected in the example of the Kalahari peoples
being compensated for their knowledge of cactus. (This
led to "invention" of a diet-pill from the low-caloric,
high-nutrition cactus that the Kalahari aboriginals used
for journeys across their desert).
There are few players in the new business of scientific
publishing as a venture capital activity: the
Dutch publishing company Reed Elsevier whose venture capital
fund is targeting related activities (www.reedelsevier.com/ventures);
BioMedCentral, (www.biomedcentral.com)
designed to enhance collaboration amongst scientific researchers;
Case A sited before of Harold Varmus' attempts to create
a new market for scientific research backed by Intel founder
Gordon Moore's foundation (www.moore.org),
attempts to organize research in areas like virology (www.virology.net)
and innovative business models from
The
DotCom era, like VerticalNet (www.vertical.net)
which showed
That
excellent business models were designed in the 1990s even
if swamped by their premature exposure to public capital
markets.
The field of knowledge management, exemplified by business
models like Groove (www.groove.com)
also raises the question of where original knowledge comes
from in the complex sociology of science in which genius
rewarded by a patent seems a somewhat out-of-date conceptualization
of the knowledge development process.
How do we quantify the value attributed to institutional
memory? Companies which have engaged in
the crystallization of their knowledge so that it can be
a separate business unit confront this directly (e.g. a
railway company which makes money from logistics or an airline
which mutates into a travel management information system).
Web-based learning and the Napster / Kazaa challenge to
music as property have focused the legal and business communities
on these issues, but it will become increasingly a part
of our experience in areas like medicine. Who
owns the data about my personal medical care if it teaches
us something about disease-management?
If I discover a Kazakh musical tradition, who owns the music,
the Columbus -like "discoverer" and distributor or the collective
knowledge source?
AIR
CONDITIONING, REFRIGERATORS AND ULTRAVIOLET WATER PURIFICATION:
The Commercialization of new Global Knowledge
The frontiers of knowledge are defined by collaborative
genius, boldness, creativity, and the ability to understand
research in historical terms as paradigms shift and offer
a vision of new opportunities. We are at such a moment
right now, as issues of intellectual property, venture capital
strategies, financing of scientific research and the economics
of knowledge are under a particularly creative moment.
The next disruptive technologies are not obvious.
They are undoubtedly not on the cover of Business Week today
or they would have already created the new markets that
resulted from their commercialization. However,
in order to understand the Canadian competitive advantage,
we need to understand how innovations have changed the world,
or "disrupted" markets to use HBS Professor Lyle Christianson's
useful phrase (see www.disruptivetechnologies.com)
for elaboration.
Technologies
have been commercialized in the past and created enormous
value. The history of companies like Carrier and General
Electric are stories of the diffusion of new technologies
and their broader economic consequences. Air conditioning
made possible the economic transformation of the American
South and Southeast Asia. The introduction
of refrigerators made possible the elimination of a black
market in former communist countries.
Consumers choose when they buy food if they own an icebox.
Suppliers determine the price and time of sale of no icebox
exists. Water-born diseases
are the largest cause of endemic poverty.
Portable water purification systems with ultraviolet light
to destroy bacteria make possible the creation of local
water supplies that are healthy. This may be the most
disruptive technology of the 21st Century.
Imagine an Africa a decade from now, where venture capital
has used the wireless internet to link stakeholders in making
investment decisions, where Mobil and Shell pay royalties
not to an artificially-constructed regime in Chad
or Equatorial Guinea
but to an African pension fund with regional affiliates.
In such an Africa, equity capital would be put into the
manufacture of customized African air-conditioning systems,
decentralized local energy systems, water purification technologies
with decentralized applications and affordable refrigeration
technologies. Innovation in refrigeration
and food preservation technologies, innovation in air and
water quality management technologies and environmental
alternate technologies will dramatically transform endemic
poverty even more than an enabling technology like the wireless
web.
A global perspective on venture capital and
the economic of knowledge commercialization is required
to make this happen. In new disciplines like
environmental engineering, industrial ecology, we see the
beginnings of techniques of collaborative research which
make possible such transformations. From
these developments and the fusion of knowledge in new disciplines,
new sources of value can be created.
For this reason, venture capitalists should be looking for
new disruptive technologies and the companies which commercialize
them. For this reason, Canadian
policy makers seeking to harness innovative skills and
facilitate the creation of prosperity by the commercialization
of existing knowledge need to explore ways that the
themes we have been discussing could be brought together
in Canada: the links to global networks or knowledge
generation and distribution, the linking of financial
strategies to emerging new and potentially disruptive technologies,
the ability to recognize areas of specialized excellence
in a maze of new research, and the capacity to make
scientific publishing and open-source learning a Canadian
core competence in a world economy defined by turning knowledge
into value.
GLOBALTECHNOLOGIES.COM
A WAY TO LOOK AT THE RELATIONSHIP BETWEEN SCIENCE AND COMMERCE
IN THE 21ST CENTURY
The
concept: A web-enabled on-going
Canadian Global Technologies Corporation which would provide
an organized framework for examining the commercial prospects
of research technologies globally.
For
a number of years, I have been advocating the concept of
a Canadian Global Technologies concept which would provide
an opportunity to create a hub of financial analysis in
Canada.
It would provide a diagnostic of Canadian inventive sources
and research capabilities, but it would also provide a hub
for a global network of knowledge creation and technology
commercialization, exploring the dynamics of new science
in areas outside the mainstream of venture capital interest.
I explored it as a business model in the days of the heavy
technology financing and as an adjunct to the research analysis
functions of an investment bank. This year,
in the Dobson Center of Entrepreneurship at McGill, with
the assistance and support of Professor Peter Johnson,
Josko Bobanovic and a team of MBAs wrote a feasibility study
on my concept and an analysis of how this might be implemented
as a McGill initiative.
From
advanced industrial ceramics to applied entomology, scientists
and engineers are working in various closed networks of
research. Commercial potential comes from
a reorganization of research into a market-driven focus.
In many ways, that is being done by innovative companies
on an ad hoc basis. Applied electrochemistry is being
done through research commercialization vehicles like Ballard,
Global Thermoelectric. A PhD in electrochemistry
could therefore target his or her research toward commercial
opportunities by looking at the business strategies of major
firms that are innovating in these areas.
Because Canadian research is geographically fragmented,
the need is even greater than in other countries and the
development of internet coordinated research even more significant.
The 50TECHNOLOGIES.COM Project, now referred to as GlobalTechnologies.com
Project is exploring the possibility of creating in Canada
a web-enabled syndication of venture capitalists and scientists
to create collaborations (public-private partnerships and
company-creation exercises) in a number of areas of academic
research other than genomics and information technologies
where the venture capital has concentrated.
In optimal terms, this could create collaborative knowledge
mechanisms and a scientific publishing/ open-source business
model such as MarineEcology.com or AgriculturalChemistry.com
in up to fifty areas of research which would:
1.
open up opportunities
for venture capital to assist in efficiently commercializing
knowledge in activities which are now not worth time and
attention because they are too far from commercialization;
2.
assist university
administrators in encouraging pre-commercial activities
informed by commercialization trends and opportunities;
3.
provide a data
base for scientific researchers with to know what areas
of activity can trigger market interest
.
If
we do this, we should start in areas where Canadians are
acknowledged to have world-leading research (e.g. marine
ecology and agricultural chemistry). If we don't
go ahead with this, what Canadians need to develop another
strategy to ensure that the nucleus of activity in these
areas is in Canada ?
First,
we need to design an incentive system which encourages collaboration
between researchers just as mergers and acquisition activity
in the marketplace creates lakes of opportunity from ponds
of disconnected initiatives. Our research-base is
too small in global terms to allow for the reinvention of
other people's wheels.
It is in this manner that the opportunities presented
by scientific publishing and knowledge management in a knowledge-to-value
economy create an opportunity for a blue-chip network like
GLOBALTECHNOLOGIES.com it
could put Canadians in the knowledge management business
where we are well-situated to excel.
By focusing on areas where Canadian institutions enjoy the
potential of specialized excellence, Canadians can create
value in a post-dotcom world.
Competitive companies will either be local services companies
that achieve excellence in management (e.g. Tim Horton's
or Indian IT outsourcing) or companies which build on specialized
excellence (e.g. the geological software in the Calgary
cluster mixing information technologies with petroleum exploration
capabilities and perhaps rechargeable batteries in the future).
For this to work, our innovation agenda must reflect a commitment
of scarce resources to specialized excellence.
But also for this to work, the cornerstone of an innovation
policy, a commercialization of technology strategy for a
knowledge-to-value economy needs to create players that
can manage a world where collaborative knowledge is a norm
and scientific publishing a new venture capital backed growth
sector.
CANADIAN
STRATEGIES FOR INNOVATION AND THE COMMERCIALIZATION OF TECHNOLOGY
.
There
is no question that a society which is committed to the
development of new ideas will facilitate communication between
inventive sources and financial strategies.
Let me offer a simple boundary line: innovation
is about market-resiliency, the mechanics of
diffusing information and the removal of the obstacles to
developing collaborative knowledge. Commercialization
is the strategy for creating value from knowledge and can
be done most easily in innovative economies.
Innovation
depends on a number of factors including the facility with
which a society commercializes technology, the clarity of
the acoustics in the networks between local finance, international
investment and inventive sources, the mechanisms which exist
to synchronize corporate strategies, entrepreneurial capital
markets and research organizations.
Innovation policy is virtually never about spending more
money. There are very few successful public policies
which benefit from simply spending new monies. Many times
additional spending is anti-innovative and counterproductive
because public monies prop up rusting organizational structures
and delay the breakthrough of new innovative approaches.
The
development of an innovative economy can, however, is facilitated:
1.
by encouraging
entrepreneurial universities here networks are designed
to share knowledge with local and global communities and
this is considered the organizational criteria for
success;
2.
by building
creative communities, where we create the multicultural
mix of Henry the Navigator's court or Spinoza's Amsterdam,
or contemporary Silicon Valley, or any Canadian city
or university;
3.
by ensuring
that the costs of disseminating knowledge are the lowest
anywhere in the world a public broadband internet
strategy for educational technologies and;
4.
by designing
institutions where science, commerce and imagination connect
easily in research parks which understand that the most
prosperous economies in the 21st Century will
be the one with the most scientifically-literate investors
and economically-literate scientists
If we are to create the most innovative economy in the world
as a Canadian project, we need to learn the discipline and
the vision of small economies, focusing on our areas of
demonstrated excellence. Instead of imitation strategies,
we need to build on our specializations.
A Canadian defense policy should focus our expenditure in
becoming the global democracies key source of identifying
biological and environmental hazards and developing fast-response
delivery of decontamination and bioremediation capabilities.
A Canadian foreign policy based on peacekeeping should specialize
in rapid-deployment police force and armed vehicle technologies.
A Canadian industrial policy has to ensure that we can be
best-of-breed in the areas in which we invest heavily.
It is not to use the old phrase about picking winners.
It is about backing winners. The ability to
connect our sources of specialized excellence to a global
knowledge network which will determine our competitiveness
as an economy and our uniqueness as a knowledge-to-value
society.
This is about backing winners, not simply "picking" winners
in the old debate of the 20th Century.
Decision-makers and investors pick winners every hour.
Venture capital is about picking winners: arguing
that collaborative learning technologies and microfuel rechargeable
batteries are winners and B2C dotcoms are not.
When public policy backs research it can do two things:
it can try to pick winners to back or it can spread resources
evenly through categories regardless of the likelihood of
success. If Canada,
a small economy, does the first, it is doomed to mediocrity
because we are a small economy. If we
do the first, we have to exercise an enormous financial
discipline and an organizational flexibility.
Twenty years ago, I wrote that government can
pick winners as well as (and can create demand better than)
the private sector. However, the private sector
is vastly superior in ridding itself of costly losers.
Without that discipline and the commitment to
organizations that a flexible and rapid-response, even well-intentioned
attempts to back winners in our areas of specialized excellence
will produce costly and embarrassing failures.
A
CANADIAN INNOVATION STRATEGY BUILT ON A CAPACITY TO COMMERCIALIZE
OUR TECHNOLOGY AS WELL AS ANYONE IN THE WORLD
The successful commercialization
of technology and the building of the commercialization
networks in key areas of scientific innovation will be a
key to the sustained prosperity of Canada
in a knowledge economy. The following
are examples I use in teaching MBAs and are cited only as
examples of their business models and scientific networks.
They are selected, however, as areas of considerable economic
potential in which Canada
has a credible claim to a national scientific competence.
They are a good place to start for a discussion of how to
recognize areas of specialized excellence.
1.
Environmental
insecticides and green farming (e.g.www.hedleytechnologies.com)
2.
Food toxicology
and the detection and prevention of food contaminants (e.g.
www.cantox.com)
3.
Marine ecology
and the development of new products from marine research
(e.g. www.marbio.com
or www.acadianseaplants.com)
4.
Environmental
sensoring and key work on bioterrorism (e.g. www.scintrex.com)
5.
Geological
engineering and industrial ecology (e.g. www.intermaptechnologies.com
and www.appliedterravision.com)
6.
The commercialization
of electrochemistry and the fuel cells clusters (e.g. www.fuelcelltechnologies.com)
If a technology commercialization strategy is one component
of a national innovation strategy, then it is essential
we remember the other components:
1. A national capital markets strategy
the efficient allocation of capital to the most productive
players is the key to a prosperous economy.
This efficiency will be enhanced by having the most scientifically-educated
investors and business-oriented scientists.
It also requires that we set as a conscious goal of public
policy the development of the most hype-free capital market
in the world, a globally-oriented that is complementary
to NASDAQ and which has the expertise to bring revenues
to early stage deals and create value from entrepreneurial
as of economic prospect. The 21st
Century Canadian capital market should be to the global
economy what the TSE was in the 20th
Century in financing mining deals for the industrial economy,
commercializing the demonstrated Canadian expertise in geology
and mining engineering.
2.
A recognition that we can only prosper if we back our
areas of specialized excellence.
An innovative society backs winners and an economy with
limited resources specializes.
Without the discipline of focus (the world leader
in bioterrorism defense and rapid deployment peacekeepers
as a defense policy, strategic commitments to democracy-building
in key partnerships as an international development assistance
strategy, concentration on areas of demonstrated
excellence as a science policy), Canada risks
becoming a bystanders in the global knowledge economy.
3.
The Internet is the greatest tool of sharing information
in human history, but we need educational technologies and
an approach to collaborative knowledge to make it effective.
In the 1990s, there was a very thin line between a chat-room
and collaborative learning. As we learn the
distinction, we will realize that the most prosperous societies
will be the ones which disseminate information widely and
have a quality control mechanism. A national
educational technologies initiative is the CPR of the 21st
Century. It involves broadband, but more importantly,
it is about the production of content that flows through
these new pipelines. Canada, as a byproduct
of our need to create a communications network to assure
a loudspeaker for Canadian voices in the media worlds of
North America, has created a capacity to integrate media,
educational content, and, now, collaborative research.
This will not happen by accident.
4.
The networks for commercialization become networks
for innovation when they bring different groups and perspectives
together. This is the importance of having
mixed public and private institutes and direct involvement
of corporations and scientists. Someone once said
to me that the key to innovation was simple and the execution,
as always, extremely complicated. The key is
to bring different people together: a Senegalese musician,
a Buddhist philosopher, a nanotechnologist from MIT and
a Dutch bond-trader. Leave them alone for a
day with a tape recorder and see what they come up with.
A nice idea (or a one-act play), but you can see the point.
Innovation happens when people who want to be challenged
are challenged. Then the tricky part called
implementation of new ideas begins.
But at least it can now start with a 21st Century
form of collaborative knowledge; empowered by the technology
we call the internet.
CONCLUSION: GLOBAL TECHNOLOGIES.COM, SCIENTIFIC PUBLISHING
AND THE NEW FRONTIERS OF VENTURE CAPITAL
Let us imagine a Canada
a decade from now.
The National Canadian Innovation Exchange is a hub, connected
to inventive sources seeking commercialization in Bangalore,
in Zurich, in Oulu, in Nairobi.
GlobalTechnologies.com has become an instrument for efficient
scientific publishing and organizing collaborative knowledge.
A commercialization strategy has created a league of new
scientific skunk works. After creating ten centers
of excellence in areas like envirogenomics and agricultural
chemistry, the federal government has embarked on
a strategy of building two new ones and closing down two
old ones each year, forcing a restructuring of assets within
the knowledge-producing marketplace (*).
Entrepreneurs have focused on building companies in spaces
where there is demonstrated specialized excellence.
A competition between portable energy and rechargeable battery
companies makes Canada
like the Swiss pharmaceutical industry in the 1920s, an
unlikely competitive environment around knowledge-generating
high-growth globally-oriented corporations.
I hope that this discussion starts us on the way to achieving
this highly attainable future.
(*)
I do not want to go too deeply into the not-continuing-to-back
loser's issue that was discussed earlier.
This is one of many possible public policy models that attempt
to deal with the "governments can pick winners but they
keep pouring good money after bad" issue. A funding
formula which ensures that there is turnover in funding
commitments will increase competition, encourage higher
risk-taking in public fund allocation decisions, and simulate
market flexibility. Another funding formula is to
provide two launch initiatives a year with a five-year,
no renewal formula. After five years, they have
to establish a commercial model for the continuation of
the research. This is the theme of another
discussion.
