Innovation Mandate: An Interview With Craig Barrett

"We have Our Priorities A Little Bit Wrong" -- Craig Barrett

Craig Barrett is not only the renowned former chairman of Intel-he stepped down in May 2009 after a 35-year career at the semiconductor leader--but he's also a vocal advocate for reforming the U.S. education system and enhancing the country's technology-based competitiveness. Barrett recently talked with InformationWeek.com editor in chief Alexander Wolfe about the steps he thinks the U.S. must take to secure and bolster its tech leadership position.

InformationWeek: What's your assessment of where U.S. competitiveness stands today?

Barrett: The United States has moved from a period where we were really the only game in town to one of greater worldwide competition. The National Academies' report "Rising Above The Gathering Storm" lays out the challenge. It's education, it's R&D, and it's the environment in the United States to promote investment in innovation. Other people are making bigger investments and working harder than we seemingly have over the past couple of decades.

InformationWeek: Does this mean that national policy makers overseas are helping their domestic tech industries, and here in the U.S. companies such as Intel are on their own?

Barrett: I don't think it's so much tech policy as it is the recognition of what the 21st century is all about. The rest of the world recognizes that education is important, that investing in new ideas--R&D--is important. And then you need to have the right environment to get smart people together with smart ideas. That right environment is everything from corporate tax rates to Sarbanes-Oxley to the availability of venture capital and intellectual property protection. A lot of the world has recognized that smart people, smart ideas, and the right environment are the only three levers you can pull, and they're pulling them.

InformationWeek: You sound like you despair of the situation, so let me ask you: Is there any danger Silicon Valley could become the next Detroit?

InformationWeek's Series On U.S. Tech Competitiveness

Barrett: It's got a long way to go before it gets to Detroit. You've still got a couple of great universities--Berkeley and Stanford. They're spinning off smart ideas and smart people, and you've got lots of venture capital. So you've still got a catalytic environment there.

InformationWeek: When you talk about education, you seem to be alluding to the fact that our culture doesn't value intellectual achievement or point kids toward science and engineering.

Barrett: We do on average a terrible job of educating our young people in mathematics and science. That in itself is almost an automatic filter against those young people going to college and majoring in mathematics and science. It's not so much a culture problem, but it's a K-through-12 problem, which then impacts all of our young people.

InformationWeek: What's your prescription for education?

Barrett: The most important education reform in the U.S. is to look at our K-through-12 system. Compare it worldwide to the best in the Organisation for Economic Co-operation and Development, and start to use tests based on international benchmarks, not based on state-by-state benchmarks. We do not compare ourselves to the best in the world. We compare ourselves to each other. That's inappropriate.

InformationWeek: What needs to be done by the government to foster continued U.S. competitiveness in technology?

Barrett: Invest in peer-reviewed, university basic R&D. Take the National Science Foundation, the Department of Energy, DOD--double that investment over a finite period of time, five years or so. It's not picking winners and losers, but it is investing in peer-reviewed basic research in our universities. Our universities are the basic research laboratory of the United States. That's where the next ideas come from.

InformationWeek: Give us your bullet points for what needs to be done.

Barrett: Fix K through 12. Get some internationally benchmarked standards to judge our performance. Recognize that the 30% of the kids in the U.S. who don't even graduate from high school are boat anchors around the economy's neck, and do something dramatically about that 30% dropout rate.

Recognize that R&D is the seed corn of the future. The government has to invest in basic R&D at our universities.

Recognize that even if you have smart people and smart ideas, you need to have an environment which promotes investment in the U.S. For a country which has the highest corporate tax rate in the world, that is not an incentive to invest. That's a disincentive. So we need to look at what other countries are doing to promote investment. We don't have to copy everything, but we at least have to have the fundamentals right.

We have pretty good intellectual property protection in the U.S., but we put a horrendous burden on corporations with Sarbanes-Oxley. That limits startups. We have healthcare costs which are out of control. And we have the highest corporate tax rate in the world.

We can throw hundreds of billions of dollars at shovel-ready, asphalt-ready projects and not put anything into the industries of the 21st century. We have our priorities a little bit wrong.

This is not a Republican or Democrat issue--it's the longstanding Washington, D.C., image that you don't make any investments beyond a two-year cycle because you don't get any return on investments for the next election cycle. That's why R&D has suffered for the last 30 years. Nobody wants to fund R&D because there's no payback for the election cycle. Its payback is in five to 10 years.

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InformationWeek's Series On U.S. Tech Competitiveness