Undercover Economist

Five lessons from the US government’s ultimate innovators

Sunday July 29 is an important day in the history of innovation. It is the 60th anniversary of the founding of the US space agency Nasa, but that is only indirectly the reason. The incidental benefit of Nasa’s creation was that it stripped another young organisation of its funding, projects and purpose.

Founded in 1958, Arpa — the Advanced Research Projects Agency, part of the US Department of Defense — started the space race, but lost its role to Nasa a few months later and was described by Aviation Week as “a dead cat hanging in the fruit closet”.

But apparently cats really do have nine lives, because Arpa resurrected itself, and went on to play a foundational role in the creation of the internet, the Global Positioning System and, more recently, self-driving cars.

So what did Arpa do, does it deserve so much credit and, if so, can the trick be repeated in other fields such as clean energy or medicine? When it comes to an invention such as the internet, it is never easy to know whether success appeared by design or by luck. Still, here are five lessons I draw.

The first is that speed and flexibility are a vital part of the Arpa model. In fact, the agency has proved such a chameleon that some think it is a mistake even to speak of an “Arpa model”. The organisation can’t even figure out its name: it stuck “Defense” in front in 1972, took it off in the 1990s and is now back to being known as Darpa. The agency has proved able to ramp-up and pull back from projects with a speed that most organisations would find bewildering.

Consider the case of Robert Taylor. He was hired by Arpa in 1965 and made director of the information processing program a few months later, at the age of 34. He then hatched the idea of building a network to connect mainframe computers at campuses across the US.

Katie Hafner and Matthew Lyon’s history of the early internet, Where Wizards Stay Up Late (UK) (US), tells the story of what happened next. Taylor sauntered into the office of Arpa’s boss, Charles Herzfeld, and explained his thinking.

“Great idea,” Herzfeld said. “Get it going. You’ve got a million dollars more in your budget right now. Go.” That was the beginning of the internet. The network, Arpanet, was running less than four years later. The meeting itself had taken 20 minutes.

My second lesson is linked to the first. Arpa hired scientists rather than bureaucrats, and tempted free spirits to work for them by giving them tight control over large budgets, and a short tenure before they were released.

Many of the agency’s most influential programme managers only stayed for a couple of years. One was JR Licklider, a visionary psychologist who saw that the future of computing lay in a more intuitive real-time interface between humans and machines. Ivan Sutherland, his successor, and one of the fathers of computer graphics, stayed no longer. Taylor succeeded Mr Sutherland and remained for three years. The three men got a lot done in a short space of time.

Computer geeks at the time were fond of retelling a story they attributed to Soren Kierkegaard, about a man who fed wild ducks until they grew fat and tame. Arpa was deliberate about not taming its wild ducks.

A third principle is to create a vigorous marketplace for ideas. Arpa projects were distributed to a variety of universities and other institutions, practical prototypes were widely shared, and researchers brought together to learn from and pull apart each other’s work.

Shane Greenstein of Harvard Business School notes that as a result, the agency managed to gain some of the benefits of decentralisation while maintaining a degree of focus and discipline.

Fourth, find the gaps. Some organisations fund truly fundamental research very well, and other organisations — often private-sector firms — excel at producing polished products to meet well-defined demands. But the gap between blue sky research and a marketable end-product is not always well served, and Arpa has succeeded by identifying projects in the middle.

A recent paper by Pierre Azoulay, Erica Fuchs, Anna Goldstein and Michael Kearney emphasises that not every innovation problem can be solved with an Arpa-style agency. Nevertheless, there seems promise in the 21st-century efforts to create them for intelligence (Iarpa) and energy (Arpa-E).

Finally, don’t forget the mission. Arpa projects may have seemed speculative, but the agency kept its feet on the ground by focusing on US national security. There is, of course, an important role for pure theoretical research — but that is not the role of this type of agency. Arpa had a mission in mind, and trusted the scientists and engineers to deliver.

The clarity of the mission, quality of programme managers and the trust shown in them may explain some of the agency’s successes, especially in its glory days. That trust ran deep.

Dwight Eisenhower, who was US president when the agency was first established, asked after “my scientists” on his death bed in 1969 — calling them “one of the few groups that I encountered in Washington who seemed to be there to help the country and not help themselves”.

 

Written for and first published in the Financial Times on 27 July 2018.

My book “Fifty Things That Made the Modern Economy” (UK) / “Fifty Inventions That Shaped The Modern Economy” (US) is out now in paperback – feel free to pre-order online or through your local bookshop.

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