Green Thumb Leadership

Interview with Judy Estrin, author of "Closing the Innovation Gap: Reigniting the Spark of Creativity in a Global Economy"
By Vern Burkhardt
"People often overestimate the aha! factor in the invention process. That process starts with creating the right kind of environment."

Innovation drives economic growth and our quality of life. We need to close the gap between where we are today and where we need to be to support sustainable innovation. Our future survival likely depends on it.

Vern Burkhardt (VB): You have been described as an entrepreneur, technologist, innovator, and three times Fortune Magazine included you on its list of the 50 most powerful women in American business. If you had to choose one word to describe yourself what would it be?

Judy EstrinJudy Estrin: It's hard to do so in one word. I would either use 'innovator' or 'entrepreneur'. Most of my career has been spent as an entrepreneur, starting companies based on innovation.

Also, my career has changed over time, and I believe in not just innovating in terms of products but innovating in terms of oneself.

So I would have to use two words, not one – innovator and entrepreneur.

VB: While you were taking your M.Sc. in electrical engineering at Stanford University you were part of a research team, led by Vint Cerf, a computer science pioneer later called the father of the Internet. The team was developing Transmission Control Protocol software code that became the cornerstone of the Internet and World Wide Web. What was Vint Cerf like as a team leader?

Judy Estrin: It is hard to isolate my memories of Vint from just that time. I've known Vint most of my life. I have kept in touch and interacted with him a lot since my Stanford days. He has been a great advisor and a wonderful friend.

Vint is an incredible person. He is one of those people who really stand out in the technology industry as a true leader. He's a deep technologist but, at the same time, can see the big picture. He's been one of the Internet's best statesmen – able to interact with diverse groups on its behalf.

VB: Did you and the team know at the time you were working on what might become one of the most disruptive technology changes ever developed?

Judy Estrin: I think we knew that what we were working on was important and exciting. Probably nobody anticipated how important it would be. We had a sense of excitement but I don't think any of us knew how big a difference it would make.

The Transmission Control Protocol work that was being done at Stanford was a very important part of what ultimately allowed the Internet to thrive. The notion of being able to interconnect, to network in a compatible way was essentially what allowed us to build the Internet.

VB: After graduating from Stanford University in 1976 you joined a small company, Zilog, which you describe as being "a hotbed of innovation". What was it about your experience at Zilog that either reinforced or gave you a passion for being an entrepreneur?

Judy Estrin: There were two sets of experiences at Zilog that resulted in my passion for entrepreneurship. First, there were the positive influences. I was employee number fifty-one. I was able to get a sense of what it's like to work with a small team, and see different aspects of the business because the company was small. For a variety of reasons I was able to move into management relatively quickly, which led me to realize how much I liked working with people and helping them develop. It was a very exciting, fast-paced environment. In that sense it showed me what a small company could do and how quickly you could move.

On the other hand, and I describe this in Closing the Innovation Gap, during the later part of my time at Zilog, Exxon Office Systems – which was an investor – took an increasingly influential role in the company. Before I left I think Exxon owned most of Zilog. We presented Exxon's executives new technology that essentially could have been the general purpose PC with word processing software. The people at Exxon didn't have the vision to understand how that technology was superior to the single function word processing companies they had previously invested in.

At Zilog, I was able to experience the wonder of working in a small environment, and also the frustration of a large bureaucracy. It showed me how powerful a small company can be. The power of building you own company, and being able to make your own decisions if you have a vision.

I left Zilog with both a passion for entrepreneurship and a sense of frustration with how large companies sometimes cannot recognize disruptive ideas because they are so fixed on where they are.

VB: They're so structured and organized that even when they see innovation they don't recognize it, or it's not a big enough opportunity.

Judy Estrin: Right. It just wasn't big enough to pay attention to.

VB: Has being on the board of directors of Fed Ex and Disney given you any special insights about innovation?

Judy Estrin: Both are incredible companies with visionary leaders. They're companies that are very large and have large scale businesses, but they have a commitment to innovation.

By being on these boards I have been able to gain better insight into the challenges of innovating in a large-scale environment compared to innovation as an entrepreneur.

One of the benefits I brought to writing my book is that I'm not just a Silicon Valley entrepreneur, and I wasn't dealing with innovation only from an entrepreneurial perspective. I understand the challenges of continuing to innovate in a large, successful company.

VB: It has been said the key role of a great leader is to inspire change, to never accept the status quo. If innovation is key in creating the capacity for change, does it follow that a leader's role is all about innovation?

Judy Estrin: Yes. Innovation should be a priority for any leader. A leader has a very strong role to play in innovation, but it's not just the leader's job to innovate.

Great leaders help create a culture of innovation, make sure that the right people are hired, communicate a shared purpose, and provide resources. Innovation itself is usually bottom-up, so the leader's job is inspiring, supporting and helping knock the barriers that often kill innovation.

VB: In Closing the Innovation Gap you say business leaders need to maximize innovation across three time horizons: current generation, next generation, and future growth. Would you talk about the innovation portfolio and especially the importance of innovation related to future growth of a business?

Judy Estrin: I talk in my book about these three horizons, and how many companies focus on current generation and next generation and forget about future growth. Businesses manage the current generation and next generation innovations in similar ways. The focus is on the current customer base, these customers' needs, and what their needs will be a year or two out.

Those projects that fall into the future growth horizon are the ones targeted at driving growth three, five, or ten years from now. If you have a company that's very customer-focused you can end up getting confused if you drive your future growth initiatives off current customer needs.

Often the future growth part of the planning will not be for your current customers – it'll be for a completely new market. The future growth may be in an adjacent market or may be very disruptive, and therefore the current customers or your current distribution mechanisms don't fit.

It's really important to have some part of the organization that is focused on future growth. It may be a small group of people that focus on connecting with start-ups, it may be groups of people that are inside the company thinking about new ideas – technologists and business people dedicated to future thinking. Groups focused on future growth need to be managed differently than the first two, which are more attuned to feeding your current business.

VB: We'll hope that even in today's financial crisis companies don't forget that lesson.

Judy Estrin: Even before the current financial crisis too many companies have been ignoring the future until they see their growth slow. One of the problems I have with today's business environment is companies have incentives to focus short-term – pressures by Wall Street or by venture capitalists. If they're going to have long-term sustainable growth they also need to invest in the future growth part.

VB: Develop a measure of businesses' capacity for change?

Judy Estrin: Yes. What I'm saying is analysts who evaluate companies or shareholders should not just look at hard metrics of the company but also at some subjective measures. Is it a company that has a capacity for change and an ability to innovate? Without a culture that values change, and a leader who understands the need to foster such a culture a company may be successful in the short-term but they're not going to be successful in the long-term.

VB: What is the innovation gap and why should everyone in America be concerned about it?

Judy Estrin: A lot of people look at the name of my book and wonder whether I'm talking about us versus another country. I'm not.

Innovation is not a zero sum game. I believe we benefit if the whole world is innovative – the whole world benefits and America benefits. But the situation that is not good is if the rest of the world becomes more innovative, and we lose our culture and commitment to innovation. If that occurs we will not be a strong partner in collaborating with the rest of the world.

The “Gap” that I refer to in the title is the gap between where we were and where we are today. Even more important is the gap between where we are today, where we need to be, and what our potential is. That's the gap I'm talking about.

Why do we need to be concerned? Innovation drives economic growth that, in turn, drives the quality of our life. It's only with innovation we're going to solve some of the major problems – whether it's achieving energy independence and reversing climate change, affordable and available healthcare, upgrading our education system, security, or our standing in the world. For all of the major challenges we face, innovation is the way we will address them.

VB: Why has America been slow to recognize there is an innovation gap, including inadequate funding and effort at basic research innovation?

Judy Estrin: I think there are a number of problems.

One I'll call a slow decay problem. When you're declining slowly and then all of a sudden you fall off a cliff. Think about how long it has taken us to realize climate change is really a problem.

Also, we have been so successful. There's so much innovation going on around us. People see new devices, social networks, and medicines, for example, and question how could there be a problem with innovation. There's so much innovation going on! Because a lot of people don't understand some of the fundamentals behind innovation they don't correlate what is going on with there being a problem.

I claim we have an innovation deficit. We're reaping the benefits of seeds that were planted decades ago, but we're not planting enough seeds that are going to drive innovation for the next several decades.

The reason I wrote the book is to try to get people to understand that while incremental innovation is very important, so is investment in the future and planting of those seeds. There's a lot of incremental innovation, a lot of building upon scientific discovery that was done decades ago. But there's not enough investment in research that may form the foundation of innovation for future generations. Not that there's no investment, but it's not enough. We're not planting enough seeds. We're not allocating our resources appropriately. There's a lack of understanding of the correlation between investment in innovation and long-term, future benefits. It could take ten, twenty or thirty years to realize you haven't planted enough seeds, and then it's too late.

In the U.S. there has also been is a decline in the overall respect for science and research, and a decline in an understanding of the importance of science to so many aspects of our life. Especially under the Bush administration, as a country, there were clear messages being sent that were deemphasizing the importance of science. I think we're starting to see a shift, but the financial crisis certainly does not help – it takes so much attention away from important things like this.

VB: Are people hearing the message?

Judy Estrin: Judging by the feedback I'm getting I think some people are starting to get the message.

I was thrilled the day of the presidential election to know who we were going to have leading the country, because I believe President Obama does understand. If you look at his presidential election platform and listen to many of his speeches, he understands the need to invest in the future. He understands the importance of science. But on Election Day, I also knew that I could not stop talking about the need to rebalance our innovation ecosystem, the problem isn't solved. It's not enough for President Obama to just get it, there's a lot of different levels of understanding, and people overall need to understand the importance of addressing the innovation gap – Congress, state and local government, and business leaders all need to understand.

VB: But the President expressing that vision is a good start, isn't it?

Judy Estrin: Yes. Another thing that makes me feel good about the shift in the administration is you can tell that President Obama takes a long view. He inherited incredible challenges and, although there are mechanisms being put into place to stop the bleeding and downward spiral, you can tell what comes out of the White House is a vision which is still taking a long-term view even as it is trying to address short-term problems. That's really important in leaders – whether of the country, states, or businesses – trying to balance focus on the short and long term.

VB: You say that sustaining the Innovation Ecosystem requires the right leadership, policy, funding, education, and culture. Given its history of breakthrough innovations, how has America lost its way in terms of having a culture that supports innovation?

Judy Estrin: The issue your question raises is how did we lose our way in our culture? There are a couple of different things that have happened.

One way of looking at it is to think about five core values that I describe in my book. You need questioning, willingness to take intelligent risk and be willing to fail, openness, patience, and trust. Interestingly in the lead-up to the dot com bubble in the 1990s when growth was accelerating, we lost our patience. We became used to everything happening immediately. We started chasing short-term greed, as opposed to thinking about long-term building of companies.

Our reaction to the crash of the dot com bubble, the corporate scandals, and the tragic attack on 9/11 was to become much more risk-averse. The way that leaders dealt with those problems was to discourage questioning. We closed in instead of opening up, whether it was immigration or security measures. We lost our trust.

In some sense the lead up to 2000, and the events of 2000 and 2001, undermined all of those five core values. If we ask which of these values has been most conspicuously missing, it's not that one is missing. The problem is the balance among them has been lost.

Let me give you two examples of how these values need to be in balance. If you have trust without questioning that's blind faith, and it doesn't encourage innovation. It doesn't encourage people to try new things and have open minds.

The better example is if you have risk without questioning, that's gambling. Taking risks without questioning, and a lack of transparency or openness to even understand what the risk taking is about, is what created our current financial crisis. This crisis then led to a lack of trust because nobody knew whom to trust. If you think about the financial crisis there was no patience going into it, people were taking risks without asking questions, there was not the right kind of openness, and the result was a loss of trust. That's a perfect example of what happens when those core values are not in balance.

A couple of other things happened in that same period of time. One was the war. War takes leadership attention, and it reduces funding available for innovation. Fighting a war takes so much money it deprives available funding for discretionary spending on innovation and even on education. So the U.S. decreased funding in those areas.

The other thing that was happening in the 1990s, and continued through the 2000s to get us to where we are today is the culture of greed. In the build up to the Internet bubble, the country became increasingly focused on valuing what I call 'trading and flipping' – trading stocks or derivatives rather than building and creating. Those people who got the richest weren't long-term investors, the people building companies, or those creating jobs. They were the people who were doing short-term financial trading. That culture in the U.S., where the rich were getting richer, became the focus compared to prior decades where the country valued building companies that created products, real value, and jobs. We shifted to a culture in which the highest paying jobs were hedge fund managers.

VB: Does that also partially explain the acceleration of corporate takeovers and buyouts?

Judy Estrin: I think it does somewhat.

The other thing is CEOs' tenure shrunk significantly after the corporate scandals. As people became more risk-averse, if the trading value of a stock went down the CEO was often blamed and replaced. If you have an average CEO tenure of three years it's hard to think long-term.

VB: You say that "Nurturing innovation is more like gardening than like karate". Would you describe what you mean?

Judy Estrin: In the chapter called “Green Thumb Leadership, I describe how leading for more disruptive innovation requires a different style than mainstream businesses. I'm playing off the fact that one of the very successful management techniques for large companies is something called Six Sigma. Six Sigma is all about managing something at scale, trying to take defects out of the system, and being able to run efficiently. These are important in the mainstream part of the business where you're producing products or services. You want to do it without defects to meet and exceed your customer expectations. Companies train “black-belts” and “brown-belts” to help implement the Six Sigma techniques.

Six Sigma is great for the mainstream part of the business. It's about short-term, incremental innovation to optimize your business. It is not about long-term innovation. For the long-term it's an absolute killer.

When you're thinking about innovation, especially more disruptive or future growth innovation, you want surprises. You manage that process in a different way, and there's no rulebook. It's more like gardening than karate. You do it with a green thumb. You try different things. You have to make decisions without having a lot of hard data, and you have to be willing to invest without knowing what the outcome is going to be. When something is little, part of your job is to protect it from the elements and let it grow, see what's going to grow out of it. Managing disruptive or breakthrough innovation is targeted at future growth areas.

VB: You quote Carol Bartz, then CEO of Autodesk and currently CEO of Yahoo, who started an initiative called "Fail Fast-Forward". And you advise entrepreneurs to avoid failing spectacularly but rather to "fail early and fail often". Would you talk about the value of failure in innovation?

Judy Estrin: No one wants to fail. You obviously don't want an organization that says we all want to fail. We're also not talking about encouraging failure due to poor execution.

But how failure is tolerated is key to an innovative culture. People will not try new things if they're afraid to fail. When you're talking about riskier things, you're going to have failure more often. So the idea is to make sure you have a culture where people understand trying something that doesn't succeed, and normally would be viewed as a failure, should be turned into a step to success. If you learn from failure it becomes a step to success. People should focus on identifying how to do that.

The goal for most businesses should be to find a way for an innovation to fail early if it is going to fail. The trick is to tackle the riskiest areas first. If you're not going to be able to solve a challenge related to a project, you want to find that out early or “fail early”, rather than first solving all easy problems and then finding out later there's something very big that's going to be a show stopper.

One of the interesting challenges the pharmaceutical industry faces is there aren't good ways to determine failure early. I believe that the whole area of medicine needs more research on things like biomarkers or other ways to detect earlier in the process whether or not a drug is going to be effective.

VB: You observe that magic happens when small groups of talented people have a sense of purpose, shared values, sufficient resources, and are empowered to come up with something great. And you say the optimal size of the group should be no larger than a jazz band or the number who can be fed with two pizzas – a well-matched team of five to eight people. At Bell Labs the ideal team was composed of twelve or fewer scientists and engineers. Why are groups that small the most innovative?

Judy Estrin: This notion of no bigger than a jazz band is an interesting analogy because the most powerful innovation comes from small teams that have cognitive diversity, people with diverse experiences, and they can play off of each other. A jazz band improvises off each other. When you have too many instruments, then you need a conductor and it becomes an orchestra.

The most powerful innovation comes from groups that can improvise, collaborate, and innovate. You get the benefit of all of the members rather than very large groups that need a conductor telling everybody what to do.

VB: So by analogy perhaps the large orchestra is like a large company.

Judy Estrin: Right. There are some small companies that have a really visionary founder who does the innovation and comes up with the ideas, and the people in the company execute those ideas. So you can have top-down innovation in an entrepreneurial enterprise, but that model typically doesn't scale.

VB: Acquisition of companies has not always been an ideal strategy for 'outsourcing' innovation. What are some better models for outsourcing R&D?

Judy Estrin: Actually acquisitions of companies can be a very good strategy if start-ups are thriving. But acquisitions are not without their challenges. If your stock is low then it is not a good time to be acquiring other companies. You need to think through the issues of how you make the decision, how you incorporate the acquired company into your culture. You also need people internally who are able to make the right decisions about which companies you should acquire.

But you can't always rely on acquisitions, because if suddenly the Venture Capitals are not taking as much risk there might not be interesting companies out there to acquire. Rather than only relying on this 'outsourcing' approach, you need to be developing more capacity internally – or maybe you need a balance.

Another alternative is to work with universities that are doing research and looking at transferring ideas. To do this takes resources internally that can collaborate with academic researchers. You can consider co-development with other companies, or outsource specific innovation challenges. I think successful companies need a mix of internal and partnering for longer-term innovation.

VB: In which area or areas do you think we will see the most disruptive innovations in the next decade?

Judy Estrin: I think the most disruptive innovations in the next decade are going to be at the intersection of disciplines, such as biotech, medtech, and cleantech.

If you look back at the last boom in terms of innovation, there was an incredible amount of innovation and advances in medicine and biotech due to significant discoveries as well as the ongoing need to improve the quality of healthcare. The computer and communications industry was driven by significant technological advances starting with the transistor and the microprocessor, but the applications that drove it were productivity enhancing innovations. People using PCs became more productive, and then consumer entertainment drove a lot of the web innovation.

When we look forward we should consider not only which areas of innovation will be disruptive, but also what needs are going to drive the application of new products and services. The combination of the need for energy independence and reversing climate change are going to come together to be a big driving force of innovation in development and research. I think healthcare and medicine are going to continue to be a big driver of innovations as we're making advances in understanding how the brain works, for instance, or understanding aspects of advances in genetics that will allow us to personalize medicine.

That doesn't mean that technology is not important, for instance information technology. But it will be applied to energy and the environment, to medicine, to robotics, and to education. I think it's at the intersection of disciplines that the real exciting stuff is going to happen.

VB: It has been suggested that greed and fear are among the most compelling emotions governing human behavior. You talked about greed being a major driver during the dot com bubble. It was also a major driver leading to the current financial crisis. Fear was a major factor in the U.S. federal government's reaction to 911 and to some corporate scandals such as Enron, WorldCom, and Adelphi. The resulting policies and actions contributed to the innovation gap in America. Will we always be driven by greed and fear?

Judy Estrin: I don't know the answer, but I hope not. In the end, greed has become so much a part of our culture and it stems from an aspect of human nature to look out for oneself. Hopefully we will learn from failure and that the current financial crisis may teach people that the 'American Dream' is not about short-term greed. It should be about long-term prosperity.

When you think about bettering your life or attaining prosperity over the long-term, you are more likely to recognize that you are part of a society and that your prosperity is dependent on other peoples' prosperity. If we can somehow shift focus to the longer-term you are not suggesting that people should not want the best for themselves and their families. If we can get people to realize what happens when they're too short-term focused, if we can make a shift from short-term greed to focusing on long-term prosperity then I think it gives all of us hope.

In terms of fear, I think that after 9/11 the leadership of the country essentially said, "there are terrible threats, you should be afraid, but we'll take care of you so go shopping." What that created was fear and helplessness. For the last eight years the style of leadership was one of leading through fear, which I think really hurt the psyche of the country.

If you look at the difference in leadership style between the last administration and the new one, President Obama leads through inspiration. He talks about the threats, but he talks about them in terms of challenges which we, as a nation – indeed we as a group of nations – must address.

What you want from leaders – whether it's leadership of the country or of businesses, or parents in a family – is for leaders to turn threats into challenges which can inspire involvement. Then people are not helpless. They feel involved, and that encourages innovation. Whether you are a company that is trying to figure out how to react to the economic crisis, a parent, or someone who has just lost your job and you have to figure out how to adjust your lifestyle, you need to believe that you can have some impact to be innovative.

VB: You caution that when under pressure, as we are today, we must not focus only on the short-term. We need to take the time to analyze, assess consequences, and think. Can corporate leaders today afford to take this time when in many cases survival of their organizations is at stake?

Judy Estrin: They have to both focus on the short-term and take the time to think about the long-term. They have no choice. As we discussed earlier, I sit on two company boards whose leaders are great examples to me that you can do both.

VB: You talk about unintended consequences of government action that can have a negative impact on innovation – some examples you give are the 1980 Bayh-Dole Act of Congress, 2002 Sarbanes-Oxley Act of Congress, and the FDA's decision in 1997 to permit Big Pharma to advertise drugs. Would you recommend these are areas that need early change by the Obama administration?

Closing the Innovation GapJudy Estrin: In Closing the Innovation Gap I was giving examples of unintended consequences of government policies, not suggesting that these specific areas need to be changed or are the highest priority.

In the overall scheme of things today, I think we have much bigger issues now than the Bayh-Dole Act. However, there needs to be a careful review anytime new regulations are being looked at in terms of their potential impact on innovation.

And we need to look at existing regulations and understand their positive or negative impact on encouraging innovation. There are things like the R&D Tax Credit, subsidizing the wrong type of energy investments, how we invest in research, and what we're doing in education that are really important in terms of getting the innovation ecosystem back on track.

VB: Do you find it ironic that, despite new regulations regarding investment banking following conflicts of interest that arose during the dot com bubble, the financial world was able to continue to operate essentially unregulated in the U.S. – resulting in the current financial crisis related to sub prime mortgages and other excesses?

Judy Estrin: Yes, it's ironic but not surprising. After the bursting of the dot com bubble and the corporate scandals, the leadership of the country reacted in a knee jerk manner. They put regulations in place very quickly to attempt to address the most visible problems and didn't adequately look at the entire picture. They did not consider the unintended consequences of the regulations they put in place at that time or of the ones they later removed.

VB: Some have observed that, in the aftermath of 9/11, the U.S. has become much more protectionist, resulting in tightened immigration policies, increased difficulty in traveling to and from USA, and the general tightening of security. Do these obstacles need to be addressed if America is to regain its preeminence as the world leader in innovation? Is it even possible for a world leadership position to be regained and retained in light of globalization?

Judy Estrin: The key thing is there doesn't need to be one leader in innovation. We need to be “a” leader, and we need to be strong to be a leader. So yes, it is possible.

The U.S. culture has a lot of things going for it including freedom, the American spirit, and our legal infrastructure including things like bankruptcy laws that encourage entrepreneurship. That type of innovative encouraging culture does not exist in every country.

But we have to address some of problems. Immigration is a perfect example where we need to identify the different parts of the issue – separate out the types of immigration. There is the problem of illegal immigration and how open we want our borders to be. That has to be dealt with separately than the much smaller but very important issue of H1B visas for highly skilled labor. This visa issue is about attracting the best minds to not just come to our universities to study but also to stay here and work. Because these two parts of immigration have been coupled together in Congress and the legislators seem unwilling to de-couple them, we haven't addressed the less controversial issue of the H1B visas.

VB: Will President Barack Obama be able to rally and inspire Americans to an even greater challenge than John F. Kennedy did when he spoke to Congress about landing a man on the moon and returning safely to Earth within a decade? Is America able to respond to such a major challenge? Can it respond to all four of the "moon shots" that you identify with equal passion and commitment in a bipartisan manner?

Judy Estrin: The moon shots that I describe in my book are inter-related and we have no choice but to address them.

The moon shot that can really be used to rally the nation is the combination of energy independence and reversing climate change. Those two things go together and, to me, that is the moon shoot of the 21st century – the equivalent of putting a man on the moon – and will drive all aspects of the innovation ecosystem from research to application development.

The other two moon shots that I mention in the book, affordable and available quality healthcare and security, are critical to providing the safety net of the country, which will allow people to be entrepreneurial and innovative. You've not going to leave your job to start a company if you're not going to be able to get health insurance. You're not going to take a risk on trying something new if you're nervous that if it fails, and you lose your job you won't be able to educate and take care of the health of your family. So I see the healthcare issues we have as a country as a moon shot, but it is also part of the required safety net that is going to allow the innovation ecosystem to get back on balance.

Do I think we can work on all of these? It won't be easy – but we have no choice.

VB: Is sustainable innovation possible in today's financially troubled times?

Judy Estrin: We have to stop the bleeding, but we also have to invest in the future. It may be that for a couple of months, or at most a year, we'll be mainly focused on stopping the bleeding. But we need to stop the bleeding in ways that are also setting the right foundation for getting the innovation ecosystem back on track. The Stimulus Bill is investing in our crumbling infrastructure – people think about roads and bridges.

I would argue that our innovation ecosystem is a critical part of the infrastructure of the country and it, too, is crumbling. If we have the right regulations and policies, invest in education, and invest in research, then innovators will do their part and we have a hope of getting out of this. It can't be all top-down.

VB: What are the two or three key points you make inClosing the Innovation Gap that you would want President Obama to pay particular attention to as he strives to address the many challenges the U.S. and the world faces today?

Judy Estrin: We have to dig ourselves out of today's crisis while investing in the future. We have to remember to focus on the future growth horizon for the country. It's not enough just to create jobs for today. We have to invest in the innovation ecosystem, including research and education. The innovation ecosystem is a key part of our infrastructure. Relatively small investments in innovation today can create decades of entrepreneurial innovation that will create the jobs of the future.

Next the psyche of the nation needs to change. I think it's really important for the President to use his bully pulpit, to get people involved and excited about the challenge. And rising to the occasion to meet these challenges. I think he's doing this and he needs to continue.

The last thing is not quite as obvious. In order to solve the problems we face, and to address future challenges, we have to break down silos. There are too many silos between the fields of science, between science and the arts, between political parties, between communities in the innovations ecosystem such as academia and business, and among leaders of business, government and non-profit organizations. By breaking down those silos we will encourage freer flowing of ideas and collaboration.

VB: You say a healthy Innovation Ecosystem requires leadership that provides vision and an environment of openness and trust. Are you hopeful that the Obama Presidential team will be that kind of leadership or are the realities of office, such as National Security considerations, inevitably going to mitigate this hope?

Judy Estrin: I am hopeful but realistic. There's no question but that the urgencies of the day are taking a lot of attention, but I also think he has surrounded himself with competent people. He has shown his commitment to using his skills and vision to try to rally the country.

You have to be realistic. These changes aren't going to come quickly. I think it's going to be a very difficult for several years. I have hope because I think he's the right leader for the time. Nobody should underestimate the depths of the hole we have dug ourselves into.

VB: You express concern over the effect of increased emphasis on standardized testing in the school system. The educational system must teach students how to learn, to be curious and to ask questions. Is educational reform in America – what is taught and how it is taught – key to closing the innovation gap? Is there anything else to be said?

Judy Estrin: I dedicated a chapter of the book to this because it is a huge challenge. It's one of the things that we won't see a direct impact for a generation, but we need to address now. It's encouraging, however, that there's lots of interesting work going on in this area.

One reason it's so hard is because of the distributed system – responsibility is at the federal, state and local levels. The federal government can provide vision and incentives for collaboration, and sharing best practices and the new administration has stated a commitment to do just that. There are a lot of interesting innovations going on in charter schools and private schools, and research at looking at different types of educational reform. We need to be taking the best of those practices, figuring out how to apply them in our public school system, and how to scale them up across geographic areas.

You can look at the innovative things happening in New York, Washington DC, or many other places where people are trying to make changes. They're not all going to succeed. Some of them are going to fail, and we're going to have pick ourselves up and try again, but we must upgrade our educational system.

VB: I gather you are alarmed about the challenges America and the globe faces. Overall, are you optimistic about the future for your son, David, his children and your great grandchildren?

Judy Estrin: People, who have read my book, often comment that I raise so many challenges they wonder how I come across sounding optimistic. When you're faced with some incredible challenges you can become overwhelmed and pessimistic, and then you do nothing. Or you can decide to be optimistic and hopeful, and try to carve out a piece that you can try to impact and effect change. I choose optimism.

I am very concerned about where we are today and about the next number of years. But I am optimistic, because I believe fundamentally in what we can do if we learn from the past and adapt to the challenges of the future.

VB: What advice will you give your son the day he leaves to attend college?

Judy Estrin: He did leave last August for college. I'm thrilled that he's in school right now and not out looking for a job.

What I have told my son and his friends is you guys are lucky you are in school right now, because hopefully four years from now when you get out of college the world won't be quite so screwed up.

VB: You told them there'll be lots of opportunities.

Judy Estrin: Right. I believe that it will be a tough couple of years, but I do have hope for the future and that by the time they graduate there will be lots of opportunities – especially for those who are innovative.

VB: You are the CEO of JLabs. Is that an anachronism for Judy's Labs?

Judy Estrin: Yes, Judy's labs.

VB: You write, speak and advise in the areas of leadership, entrepreneurship and innovation. Is that an adequate summary of what you are currently doing?

Judy Estrin: That's a fairly accurate description of what I do. I play a variety of different advisory roles in the areas of leadership, entrepreneurship and innovation. It involves sitting on boards, speaking, and various other advisory capacities.

VB: As a consultant as well?

Judy Estrin: Periodically I do but it's not a consulting company. I have done some consulting but I wouldn't call JLabs a consulting company. That's why I put it in the bucket of advisory services, because it's more generic than consulting.

VB: Any books you would especially recommend?

Judy Estrin: I think that Thomas Friedman's book Hot, Flat and Crowded carries a very important message.

VB: And the obvious question – are you working on another book?

Judy Estrin: No, not now. I'm spending my time spreading the message contained in my book. Between that, my board of director seats, and advisory work I'm kept busy.

VB: You've been interviewed by a number of people, who may or may not permit you to focus on the key points you would like to make. What questions have I not asked, or what additional points would you like to share with our readers?

Judy Estrin: You've asked a lot of questions. Nothing further comes to mind.

"Sustainable innovation does not happen in a vacuum. It is not just a flash of brilliance from a lone scientist, nor is it simply the result of a group going offsite to brainstorm and play team building games."

Business leaders need to encourage incremental innovation to meet existing customers' needs, next generation innovation to maintain their company's market share or to leapfrog the competition, and innovation focusing on future growth beyond existing customers and markets or on radical disruptive innovation in existing markets. Focusing only on short-term innovation is a good predictor of intermediate to long-term business failure.

While there are major problems to be addressed, in Closing the Innovation Gap author Judy Estrin offers us optimism they can be solved by renewing the balance among five key societal values, closing the innovation gap, and mobilizing to set some "mood shot"-type goals that will save our planet and enhance our life style.

Judy Estrin's bio:
Judy Estrin is CEO of JLABS, LLC where she plays a variety of different advisory roles in the areas of leadership, entrepreneurship and innovation. Previously, she co-founded seven technology companies and was Chief Technology Officer at Cisco Systems. At Cisco, she was responsible for strategic technology planning and business development, including investments and acquisitions, consulting engineering and advanced Internet projects, as well as legal and government affairs.

She sits on the board of directors of Federal Express and The Walt Disney Company. Three times she was named to Fortune magazine's list of the fifty most powerful women in American business.

Judy Estrin is the author of the new book Closing the Innovation Gap, released in September 2008.

Estrin holds bachelor's degrees in mathematics and computer science from University of California Los Angeles and a M.A. in electrical engineering from Stanford University. While at Stanford she a member of a research team that was involved in the early development of Transmission Control Protocol software code (TCP/IP protocols) that became the cornerstone of the World Wide Web.

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