Professor to explore effects of innovation

Call it an innovation. On December 6, Ashish Arora, a professor of economics and public policy at the Heinz School, was one of 15 business and academic leaders appointed by U.S. Secretary of Commerce Carlos Gutierrez to a new panel to study the economic benefits of innovation in business.

The committee, named the Measuring Innovation in the 21st Century Economy Advisory Committee, will develop a method of measuring innovation that will allow policymakers and the public to better understand innovation’s impact on economic growth and productivity, according to a press release from the Department of Commerce.

Arora defined innovation in this context as being not so much technical innovation — specific advances and developments in software and hardware — but rather the ways in which businesses structure their internal and external workings, which Arora called “organizational innovations.”

The committee’s goal is to figure out a way to measure these innovations systematically in order to provide guidance or recommendations about the role of such innovations in future American business activity, Arora said.

Arora used Dell as an example of a company that practices this philosophy. Dell produces very little in the way of new technology; the company’s innovations primarily have to do with devising new and more efficient ways to sell computers to businesses.

This kind of innovation will be of particular interest in the 21st century, Arora said, which will cause it to become more prevalent.

However, the role of the committee in the field of innovation is still partially obscured. The committee will not meet for the first time until February 22, at which point members will have a better understanding of what the committee’s function will be, Arora said.

“[The other members are] a very distinguished group of business executives, some of whom have gone on record speaking about innovation from their own perspective,” he said.

Arora was one of only five appointees drawn from the academic sector.

Arora said he was looking forward to learning about the nature of companies’ individual systems and infrastructure by working with the business executives. This information will be key in determining what features are measurable in the field of innovation.

He is particularly looking forward to talking to CEOs directly about their licensing technologies — an area of expertise for Arora — and how their licensing policies are changing the way they conduct business.

Licensing, how companies negotiate the manufacture of their technologies with other companies, is a major component of business. Innovations in efficient manufacturing and distribution can create vastly greater profit margins.

Though Arora is an expert in the function of innovation within an economic context, he is less adept at keeping up with the technological innovations themselves.

“Like many middle-aged people, I’m quite inept at dealing with modern technology. I could not program your DVD player for you,” he said.

What Arora does have is extensive, prolific knowledge of the relationship of economics to technologically based industries, such as software, biotechnology, and chemicals, according to a university press release. Arora has made a career out of understanding of how innovations have played a pivotal role in shaping core trends and movements.

He will apply his expertise toward helping the committee understand the effects of the economics of innovation on a large scale.

While it is important for Americans to be aware of the events and changes in industry and technology in order to ensure future success, Arora believes that America is already firmly established in the area of software innovation.

“The United States is extremely well-situated in a number of positions to remain the leading center of innovation,” Arora said. “We have certainly the best research university system, and a very large market that has been unified for a long time; we speak the same language, use the same currency, [and] have more or less the same setup nationally.”

He explained that the United States is in a unique position because it draws in a large number of technical innovators, entrepreneurs, and artists. In addition, the U.S. is home to many software companies whose products are used to run large organizations, e-mail systems, networking systems, and accounting.

“Software innovation relies heavily on being able to understand what users want and how they want to use the software, and that requires being close to them. America is where these leading software users and institutions are,” Arora said. “We are probably going to remain on top, at least for the forseeable future.”