Investing in knowledge -- a term that in this context encompasses funding for research and development, higher education, and software -- is seen as a way to create national wealth, enhance geopolitical power, solve social problems, and bolster national pride.
Developed nations spend an average of $1,270 per capita per year to improve knowledge yet these investments fail to achieve the desired benefits, according to Forrester's study.
The U.S. spent almost $300 billion in public and private money on R&D in 2003, about half of all R&D spending by the 30 member countries of the Organisation for Economic Co-operation and Development (OECD). America can claim 35% of all patents filed in Europe, Japan, and at home. But such spending doesn't create jobs or boost the number of goods and services produced by a country -- also known as the gross domestic product (GDP).
In order to more efficiently direct spending, governments rely on "a whole industry with tens of thousands of consultants, functionaries, and social scientists" but the 60 national innovation studies reviewed by Forrester demonstrated three major common flaws: bias, flawed analysis, and shortsightedness.
"Whether you favor or oppose stem-cell research, strong intellectual property protection, or nanotechnology, you will find an innovation study to support your point of view," the study says. "Rather than seek the truth, audiences choose and sponsor the studies that confirm their political goals or social biases."
The report also finds that analysis of national innovation systems are overly simplistic and that they confuse innovation with invention. Invention, as defined by the report, is a subset of innovation and "national employment, power, wealth, and well-being depend more on the deployment of innovations than on the invention itself."
The most significant governmental misconception about innovation, the study finds, is the tendency to view nations as closed systems that each need the capacity to invent, commercialize, finance, deploy and operate.
Forrester proposes the system would work better if nations focused on areas of national competency among four innovation roles: Inventor, Transformer, Financier, or Broker. Its report finds that no one nation leads in all roles and argues that nations will need to work together to make the most of their strengths.
That sounds plausible on paper, but getting a group of nations to work together for the common good is easier said than done.
The Business of Going DigitalDigital business isn't about changing code; it's about changing what legacy sales, distribution, customer service, and product groups do in the new digital age. It's about bringing big data analytics, mobile, social, marketing automation, cloud computing, and the app economy together to launch new products and services. We're seeing new titles in this digital revolution, new responsibilities, new business models, and major shifts in technology spending.