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Angry Birds And Our Continued Flailing Attempts At Energy Innovation

It’s not that America has lost its ability to innovate. The problem is that the smartest entrepreneurs of our time are making iPhone apps instead of creating important businesses that drive growth and jobs.

Angry Birds And Our Continued Flailing Attempts At Energy Innovation

The game-changing innovations that have historically driven U.S. economic growth are harder to come by today than a generation ago, let alone in our grandparents’ time. That's the premise of The Great Stagnation: How America Ate All The Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better by Tyler Cowen. I agree with Cowen that our economy's "low-hanging fruit" has gotten scarce. And while you have to admire the ingenuity of growing companies such as Facebook, Groupon and Rovio Mobile (the imaginative folks behind Angry Birds), these businesses do not hold the key to future job growth and economic prosperity.

But I respectfully disagree with Cowen's conclusion that we are on a "technological plateau" and that we need a new resurgence in scientific exploration and invention to take us to the next level. There is, in fact, a steady stream of innovation taking place in critical infrastructure disciplines like energy, transportation, and buildings. It’s the kind of innovation that has the potential to create jobs and get America back on a path to GDP growth and a better quality of life. It’s not that America has lost its ability to innovate. It’s that since the 1970s, we have been unable to build anything but the absolute minimum infrastructure. 

When you have obsolete and decaying infrastructure, you cannot have growth. At the same time, we have off-the-shelf technologies of the future moving through the R&D phase with no one standing by to deploy them. During the 1970s oil crisis, for example, we started an intense R&D program into energy alternatives (alternative fuels, renewable electricity, vehicle efficiency) that would free us from the commodity price fluctuations of coal, natural gas, and oil. When gas prices fell, we lost the motivation to bring these technologies to market.

Three decades later, these technologies are ready to be deployed and make money for businesses and create millions of job-years. But they lie dormant as venture capitalists and the capital markets pursue faster, easier returns. Incumbent companies in established businesses hold them back by pulling out all the stops to protect their outdated business models. And driven by the ever-present next election cycle, politicians are unwilling to boldly step into the future by upsetting their donors of the present.

Here is something else getting in our way: the smartest entrepreneurs of our time are making iPhone apps instead of creating important business model innovations for infrastructure. Peter Vesterbacka (lead developer of Angry Birds, which is a Finnish company, true, but this problem persists everywhere) and his team are geniuses for creating an app that at times has over one million downloads per day. Now, imagine what we could achieve if we could shift even a small percentage of these wunderkinds to figuring out new business models for energy efficiency retrofits or agricultural productivity.

It’s low-hanging fruit, but fruit we cannot reach because it requires impact investing—a strategy where investors seek to make money as well as achieve a social or environmental goal. We also need the government to stop promoting natural gas as the "bridge to the future."

This week, for example, natural gas pipelines receive streamlined financing through a government sanctioned "Master Limited Partnership," which eliminates double taxation for investors. Sadly, renewables are expressly prohibited from participating in this government solution, preventing people from investing their money in low risk, high-yielding renewable energy investments.

So, am I an angry bird? Yes. I am angry that outside of a regular drumbeat of press conferences, our government is doing nothing to encourage a level playing field for critical infrastructure innovation and deployment. Without that encouragement, talents like Peter Vesterbacka will continue to be drawn to activities that offer an opportunity for personal wealth creation—instead of ones that also offer a chance to get our economy growing again and change people’s lives.

[Image: Wikipedia]

Jigar Shah is CEO of the Carbon War Room, a nonprofit that harnesses the power of entrepreneurs to implement market-driven solutions to climate change and create a post-carbon economy.