“Most of the time these bands didn’t make much of a dent, but sometimes one would break through, and that one breakthrough would kind of cover the cost of all those who didn’t,” Chesbrough said. “But in the digital music environment, that vertical chain of value added between the artist and the consumer has really been disaggregated.”
The music production chain is now disrupted at each step by new websites, applications, and companies that serve as a loose confederation of music services, all aimed at aligning the interests of those who create music and those who influence and enjoy it. The public doesn’t need to wait for a compact disc and a marketing campaign; it can now unearth new songs and styles through the likes of Last.fm, Pandora, and YouTube, and spread the word through social media and trendsetting sites. The public can even help fund the rise of musicians on sites such as Kickstarter or ArtistShare, with sponsors allowed to watch recording sessions and gain access to extra material that the artist has produced. Ideally, when the two parties are in it together, artists will get better feedback and audiences will get better music.
While Chesbrough’s description of the music industry was in reference to, and in the prism of, private enterprises, I was struck by how much this philosophy of looking and getting beyond boundaries animated a view that President Obama had articulated in shaping our open government vision. That was the principle, borrowed from Austrian economist Friedrich Hayek, of knowledge being “widely dispersed,” and that, to solve problems, we should harness the power of technology and innovation to tap into it.27
Mitch Kapor, the legendary founder of Lotus Development Corporation, saw these concepts clearly, and spoke of them in the context of an important public policy issue—health care reform. He had come to the same core conclusion about health IT that Chesbrough had drawn from his study of the legacy music industry: that value could be created through a more active consumer. He had come to another conclusion: that there was “a yawning chasm” in mindset and capability between those participating in the lightning-fast Internet economy and those operating in the health IT space.
He tried to bridge that gap while keynoting the Health Information Technology Platform symposium on the Harvard Medical School campus in September 2009.28 A group comprised of nearly 100 health IT leaders gathered to propose practical, actionable steps to create a health IT platform. From Kapor, they heard that to improve health through the use of IT, “It would have to be along the open innovation lines, because it was just never going to get there otherwise. Just never, ever happen.”
He left the audience with clear takeaways, centering on the need for open standards, decentralized architecture, and even a role for government—all concepts that fit neatly into the open innovation framework. Concerning that government role, he envisioned a light federal approach, similar to the one that governs the Internet, with no single government entity running it from up top. The Internet operates through a decentralized multistakeholder network comprised of leaders in the public, private, and academic communities. The U.S. government simply serves as a facilitator, to insure that information flows across boundaries. It does so through its support for the Internet Corporation for Assigned Names and Numbers (ICANN)—essentially the address book for the Internet. Kapor believed that the government could build on the foundation of the Internet and serve as a facilitator for the safe, secure, free flow of health information. That meant using its convening power to achieve consensus on a set of technical standards and encouraging an early “critical mass” of users from the private sector to participate.
Even more important than the government’s role on the technical front was its responsibility to alter the payment system in health care. More specifically, it needed to shift the reimbursement model to reward providers who focused on keeping patients healthy, rather than just treating them after they are sick. Such a change would create market opportunities for new products and services that can assist providers in identifying patients who should be prioritized, because of their risk of illness, and then find better ways to reach and monitor them. (That payment reform authority would become law when the Affordable Care Act was passed in March of 2010.)
This health Internet would be different and better from what was widely available already: the hundreds of health apps downloadable on app stores but lacking access to full personal medical records. It would capitalize on the freeing of that data to unleash a prosumer model, in which patients not only provide the data but also constructively interact with medical professionals along the chain. That could alter the way in which health care is delivered. For instance, a patient might wish to share lab results from the emergency room with his personal doctor for better care coordination, reducing the need for unnecessary additional tests.
The vision of a health Internet marketplace was a natural extension of Chesbrough’s open innovation framework, applied in government. After participating in the Harvard meeting, I returned to Washington with Todd Park, then the Chief Technology Officer of the Department of Health and Human Services, as its advocate. As we will recount in depth in Chapter 5, it led to the birth of the Health Data Initiative and contributed to the creation of more than 200 products and services (according to a McKinsey & Company estimate) in its first three years.29
Through my experience, I accumulated considerable evidence that the open innovation model, so effective in the private sector, also works in what Chesbrough dubbed “the mother of all services,” the government. And it works in much the same manner that culture creation, maintenance, and expansion advanced P&G; that tapping into frontline workers assisted Amazon; and that the force multiplier of standardizing open interfaces propelled Facebook. Just as the private sector achieved more with less and then replicated and scaled those achievements, the government could use those same open innovation principles to achieve more innovation and better outcomes, with less taxpayer investment. It could cut through some of the tired debates about the size of government.
“A more open, innovative government isn’t really described as either big or small, but rather how government can be effective . . . as a partner to the private sector, not as a replacement for it,” Chesbrough said. “This isn’t an argument for going from 2,000 to 50,000 government workers. It’s using 2,000 government workers to create a platform that invites 50,000 external participants to build on top of it.”
Government’s role in the economy should be, in Chesbrough’s view, to “do enough to liberate or harness the energies of the private sector”—and in doing so, bring the two together.
“These [open innovation] initiatives have the effect of giving more information to more people sooner,” Chesbrough said. “Instead of distancing people from government, they have a way of connecting people to government, and, indeed, empowering people through data and information from the government to improve services in their own lives, from the local city block to the regional and national levels.”
But how would we give some permanence to these connections, specifically at the federal level, so they would outlast any administration? How would we institutionalize a culture change, taking a page from, among others, Procter & Gamble? How would we guide successors on choosing and shepherding open innovation projects, whether that meant freeing data, fostering collaboration for the lowering of barriers to entry, or engaging third-party application developers to act as force multipliers?
Those were the questions that I attempted to answer in crafting the aforementioned, in-house memo that President Obama assigned—and in the related version that was released to the public. I called that version the Open Innovator’s Toolkit, a compilation of case studies where government agencies had successfully applied these open innovation principles through the use of four different policy tools. The four tools represented not an expansion of government, but an expansion of the available options—often within existing authorities and resources—for policymakers to deploy from any leve
l of government, anywhere in the world. They were designed to give policymakers the license, impetus, and ability to break down the walls between the government and the best and brightest entrepreneurs, so all parties could speak a common language.30
These four tools are:
Open data. This entails enabling the public to access more of the information that is stored in digital file cabinets throughout the government, not simply for the sake of transparency, but so it can be incorporated in new products and services to help businesses grow.
Impatient convening. This refers to government’s role inviting the private sector to work collaboratively on standards that lower barriers to entry and increase competition, especially in public and regulated industries such as energy, education, and health care.
Challenges and prizes. This involves casting a much wider net to solve a particular problem than available through traditional, often cumbersome and wasteful government procurement; and paying for actual results rather than flashy proposals.
Attracting talent. This includes recruiting entrepreneurs into the government, to team up with similarly skilled public officials in a startup setting, to produce breakthrough results in a tight time frame.
These four concepts, collectively, open the way for a new paradigm in American government, not the small agrarian state matching the early republic, nor the bureaucracy that grew after the Civil War, nor the inefficient relic of the New Deal, but a twenty-first century government that elevates the role of everyday Americans.
The open innovation story is, at its core, about those everyday Americans, those worthy of the “wise and frugal government” that Thomas Jefferson envisioned in his first inaugural address.31 They deserve a way of thinking that empowers rather than divides, that confronts challenges rather than creating them, that solicits all types of expertise rather than espousing tired approaches. They deserve an American democracy that isn’t defined by the playing of political games, but by the way it allows its citizenry to play a constructive role.
Open innovation is about handshakes and handoffs: the handshakes between powerful, enabling entities that allow for the handoffs to those with the hope, ambition, inspiration, and ideas to make our country better, in every conceivable way.
Chapter 5
Open Data
Thomas Jefferson was something of a weather nut. Well prior to 1776, he made careful observations and kept meticulous records of meteorological events at assorted Virginia locations, especially at his Monticello residence, where his routine included two weather records per day—once when he woke at dawn, often the coldest time of the day, the other between 3 and 4 p.m. when he had found it to be the hottest.1 In July of that year, he was in Pennsylvania, for a rather momentous occasion in American history: the signing of a document he helped craft, the Declaration of Independence. Yet he still found time to squeeze in a visit to a nearby merchant to purchase a thermometer and then document Philadelphia’s morning, afternoon, and evening temperatures in his diary. For the record, at 1 p.m. on July 4, Philadelphia’s conditions were clear and mild, with a high of 76 degrees.2
Jefferson later took his weather passion overseas. While Minister to France from 1785 to 1789, he sought the most accurate instruments available, to compare readings with those in his home country, and validate the viability of America’s agrarian ambitions. According to the Thomas Jefferson Encyclopedia, “His initially patriotic motive was to topple one of the two ‘pillars’ of the theory of degeneracy of animal life in America advanced by the Comte de Buffon and other European scholars—America’s alleged excessive humidity. Also in his role as champion of the North American continent, Jefferson began in Paris to compile a record of the ratio of cloudy to sunny skies. After a five-year residence in France, he had proved to himself that America completely eclipsed Europe in the sunshine contest and he appreciated more than ever the ‘cheerful,’ sunny climate of his native country.”
After winning his first of two Presidential terms in 1801, Jefferson incorporated weather observation into official government duties. He did so most famously with the Lewis and Clark Expedition in 1804, instructing the western-bound explorers to observe “climate as characterized by the thermometer, by the proportion of rainy, cloudy & clear days, by lightening, hail, snow, ice, by the access & recess of frost, by the winds prevailing at different seasons . . .”
Over the next few decades, other leaders began to promote greater weather data collection. During the War of 1812, James Tilton, the Surgeon General of the Army, called for his fellow hospital surgeons to do so. During the 1830s and 1840s, James Pollard Espy, a meteorologist known as the Storm King, secured state (Pennsylvania) and federal funding to expand and equip a network of weather volunteers. In 1849, Joseph Henry, the first Secretary of the Smithsonian Institution, found a way to capitalize on exciting new technology: the commercial telegraph, which had been introduced four years earlier.3 Henry established a novel public-private partnership, convincing many telegraph companies to waive transmission fees on all weather recordings sent to the Smithsonian’s forecasters for analysis. Within a decade, after receiving the cooperation of telegraph stations from New York to New Orleans, Henry was able to produce a daily weather map for nearly 20 cities, and share it for publication in the Washington Evening Star.
Still, the federal government remained small, and there was no formal weather agency at the start of the Civil War. Nor was there one by its end, even as government was growing some in size—in 1862, the Department of Agriculture was founded, and from 1861 through the end of the decade, the number of federal workers nearly tripled.4 Then, on February 9, 1870, several months before the founding of a more heralded agency—the Department of Justice was formed to handle the postwar surge in litigation—President Ulysses S. Grant signed Congress’ joint resolution to create the Division of Telegrams and Reports for the Benefit of Commerce.5 That agency, operating under the U.S. Army Signal Corps, was charged with making meteorological observations at military stations “and other points in the States and Territories,” while using magnetic telegraph and marine signals to give notice “of the approach and force of storms.” Two decades later, President Benjamin Harrison initiated the transfer of weather-related duties to the Department of Agriculture on the civilian side of government.6 Through the passage of the National Weather Service Organic Act of 1890, the new U.S. Weather Bureau was directed not only to collect data but to “publicly distribute weather information useful to sectors of the nation’s agriculture, communications, commerce, and navigation interests.”7
That mandate and mission of openness remained consistent throughout the next several decades, even after the U.S. Weather Bureau’s move to the Commerce Department in 1940, and even as advancements in technology transformed the means of weather collection. The evolution in data-gathering instruments can be traced from kites (late nineteenth century) to upper air balloons (early twentieth century) to reconnaissance airplanes (1920s), all the way to radar and satellites—the remote sensing tools that were initially developed to serve the military but co-opted by weather data collectors in the late 1950s and early 1960s, respectively.
In 1970, thanks to President Richard Nixon’s order, the U.S. Weather Bureau was renamed the National Weather Service (NWS) and moved to another new home—the Commerce Department’s National Oceanic and Atmospheric Administration (NOAA).8 NOAA would eventually become a behemoth, one now with an annual budget in excess of $5 billion, much of that utilized by the NWS to deploy weather-monitoring satellites, run its national and regional centers, and run its local forecast offices.9 As that has occurred, a robust private weather industry has emerged alongside, using the government data but providing greater customization and analysis in forecasting—for the likes of airlines, utilities, and agriculture firms—than the NWS, with its limited staffing, can always offer. For instance, since 1976, New York–based CompuWeather, with its staff of certified meteoro
logists, has provided forensic work to document past weather events for the purpose of insurance companies and attorneys validating claims, while also providing forecasts for film production companies so they know where and when to shoot.10
These two growing enterprises have benefited from refinements in policy, to reduce the natural tension between them. In 1978, NOAA adopted a policy that it would not “provide specialized services for business or industry when the services are currently offered or can be offered by a commercial enterprise.”11 Over the next three decades, the agency would further clarify the parameters of its partnership with the private sector, while endeavoring to make forecasting more relevant and precise. In 2004, it tweaked its data format from a proprietary one to an open Internet standard called XML, lowering barriers to entry and thus expanding the base of potential participants.12 Now, more than 50 percent of the members of the American Meteorological Society are employed in the private sector.13
Through it all, NOAA’s mission has remained the same: “making data easy and affordable . . . creating a more informed public, providing unbiased information . . . and giving the commercial weather industry an opportunity to flourish.”
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