How the government can turbocharge private-sector innovation

With the election behind us, one of the major issues the administration will need to tackle is how to encourage entrepreneurs to innovate and bring the country back to its position of leadership in the global economy. To spark innovation, it is time for government and business to work together in new ways, embracing President Obama’s commitment to open government.

Historically, the public and private sectors have had different priorities. The private sector’s profit-centric focus favors businesses that play it safe and shy away from spending on costly infrastructure or risky R&D. The public sector, on the other hand, serves the interests of taxpayers, eschewing commercial interests and taking on public works projects, building infrastructure, and, most relevant to this discussion, funding research and development.

Occasionally the federal government invests in the private sector, with unpredictable results, such as the recent case with Solyndra. However, when the federal government and business approach one another as complementary forces – rather than as producer and consumer – there’s the opportunity for real innovation to flourish and for history to be made.

A history of public-private cooperation

Let’s rewind to the early 20th century: The National Advisory Committee for Aeronautics (NACA), NASA’s predecessor, operated a handful of wind tunnels at the Ames Research Center and Langley Aeronautical Laboratory primarily for use in testing aircraft developed during the World Wars. But if NACA had not also allowed The Boeing Company to make use of its research and test facilities, it would have almost certainly delayed the introduction of the first commercial airliner, the Boeing 247, by over a decade.

To a certain degree that same need for public support of private enterprise still exists today. For instance, were it not for NASA’s financial commitment to SpaceX, we would not be on the verge of an historic new commercial space industry. Similarly, after Sebastian Thrun’s team nabbed the $2 million bounty the U.S. Department of Defense put up for the 2005 DARPA Grand Challenge – a race across the desert driven by robotic cars – Thrun ended up leading the Google Driverless Car initiative.

The tradition has moved to the cloud

One of the strongest showcases for how the public and private sectors can work together and create brilliant innovations can be seen in the computer industry, specifically in the realm of cloud computing.

OpenStack has its roots in NASA’s Nebula project, which aimed to create an efficient, self-service cloud platform. As an undertaking of the federal government, NASA Nebula’s budget was drawn from public funds. Executives at Rackspace noticed that Nova, the open-source compute engine at the core of NASA Nebula, complemented their planned open-source storage system. After contacting NASA to explore opportunities for collaboration, the OpenStack project was born in July 2010. Today, OpenStack is the fastest-growing open-source project in history (eclipsing even contributions to the Linux kernel), and has garnered support from industry leaders such as AT&T, Cisco, HP, IBM, Intel and Microsoft, as well more than 500 developers from 850 organizations in more than 80 countries.

What we’re seeing then is the early indication of a new computing ecosystem forming, driven by the foremost innovators in enterprise IT. This isn’t limited to OpenStack, either. Eucalyptus (which started as a publicly funded research project at UC Santa Barbara, by Professor Rich Wolski) is also seeing significant adoption. The ability to customize your cloud to your specification adds value that can’t be overstated. This is especially true in a market where financial services companies, healthcare companies, government agencies, and other organizations need to know exactly where all their information is at all times.

Open source instead of patents

The fact that the open-source model can enable organizations to gain new use from their data and greatly increase the efficiency of their IT operations is proof-positive of the return on the government’s initial investment. Given this success, a similar approach should be considered for other areas of public investment, such as with the patent arena where NASA is once again a model.

Traditionally, NASA attempts to commercialize and otherwise transfer the good work done in its research labs to the public by two means: directly auctioning its patents to the private sector, or maintaining the patents but  actively choosing not to enforce them if doing so would impede innovation. NASA claims over 1,200 success stories in this regard, and there’s plenty to show for it. But arguably no single NASA patent has had the same kind of market-disrupting effect that OpenStack has had merely by opening the doors to the community and letting the market drive development and adoption. That’s food for thought.

Consider the more common alternative: Merely licensing federally funded research keeps the resulting technology proprietary, which restricts the possibilities for innovation. And more importantly, the probability of any of the select companies that license the technology succeeding is quite small. Thus the resulting license revenues returned to the government would likely hardly cover the overhead of maintaining the infrastructure to create, manage, and license the patents, and many technologies are not commercialized simply because of the overhead of the process.

A better alternative to patenting technology would be to require that any technology developed by taxpayers – be it hardware or software – would be open sourced. Using a license such as the Apache License or the General Public License, any business or individual could take publicly supported work and  download, share, modify, and remix it. The result would be a new wave of innovation, as private companies build better companies based on public sector research.

The patent system, patent reform, and the government’s approach to technology transfer are all large, intricate and nuanced topics – too intricate and nuanced to go into here. That being said, let’s not allow success stories like OpenStack to become exceptions. When “open” goes from being a buzzword to the default way our government fuels innovation, the sky will be the limit.

Chris C. Kemp, CEO of Nebula, is a former CTO of NASA and co-founder of OpenStack. Follow him  @kemp