One area where India continues to outpace China is in the amount of money they attract as an outsourcing partner for R&D, some $13 billion in 2008. This is likely attributable to several factors including IP concerns, a strong history of outsourcing in India by IT firms and the prevalence of the English language. It will be interesting to see how long this advantage can be maintained. China’s strength in the sciences and its sophisticated manufacturing base will make it an increasingly attractive partner for R&D. In many areas of research it may become a case of partner with the Chinese or be run over by them.

There remains an enormous difference in the nature of R&D in The United States as compared to China and India, and that is where the money comes from. Fully 69% of the R&D money in China and 74% in India come directly from the government. Virtually the exact opposite is true in the US, where 65% of the money comes from industry. This is at once the greatest strength and the greatest liability of the US R&D position. During times of trouble, such as the last 18 months, Industry tends to retreat, even in R&D spending. Additionally, R&D spending driven strictly by profit/loss equations can be said to be more near term focused. Of course that very focus and motive may be said to be missing from government driven initiative, sometimes dominated instead by politics and even less savory elements.

America must work hard to maintain its advantage in the face of strong competition from around the world. It is already perceived to have lost or be near losing leadership in many of what are considered to be the most important issues of the day, energy and the environment. Is this a reality or simply a matter of bad PR? Time will tell and I am certainly no green alarmist, but I worry that unless the profit driven forces in the US find a reason to drive hard in these areas, the reality will be worse than the perception. If that happens we will be reliant on technologies developed elsewhere to solve our problems at home.

As Cemex and other players look to liquidate non core assets, will others be able to capitalize?

True, technology is moving forward at leaps and bounds and it seems new and promising research is announced daily that will save the environment/cure cancer/prevent bad breath/insert your favorite cause, but much of it has proven devilishly difficult to bring to full realization.

The argument continues that this failure of innovation to deliver on promise caused debt driven growth based on a fantasy vision of the future. I can buy into this pretty easily for biotech, energy, technology and a few other areas, but I’m still looking for a connection to the cement boom. The argument could be made that cement manufacturing as an overall process has been in the slow lane for a long time. It’s a low risk kind of business after all. Innovation has been primarily focused on incremental improvements in production, quality, reliability, environmental compliance, and cost. Very few producers are really trying to do anything differently, just better, and the OEM’s are simply meeting the demands of the market.

Tell us what you think. How did the innovation gap figure into the cement production investment bubble? Should producers be investing in completely new approaches to making cement? … or is there simply an enormous amount of low hanging fruit readily available in the day-to-day operation of a cement plant – yet to be tapped? 

Trying to decide whether to innovate or survive in tumultuous times? Asking the question misses the point, the only answer is to do both! But how? Over at Harvard Business Publishing, they have started to publish a series of articles with some of the key points from a brand new book, The Silver Lining: An innovation Playbook for Uncertain Times. The summaries sound promising and the book is definitely on my near term reading list. Read the articles in the links and download a free copy of the first chapter and it will probably be on yours as well.