June 1, 2020  
 
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Role of the National Laboratories

The national laboratories play a vital role in our nation's economic development, but there are still some who question whether the role of the national laboratories is perhaps misplaced and outdated.

Those who would limit the role of the national laboratories by reducing national laboratory budgets argue that many of their projects are best addressed by the private markets.
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But our take on the topic is that the national labs are an essential tool for sustained economic growth in this country.

We have many national labs in this country, and they play a vital role in fostering innovation in the scientific community and fueling research and development that creates economic opportunity for the nation's entrepreneurs.

As you probably know, the national labs had their genesis in supporting military needs.

Today, while there are still a number of military and national security projects underway within the national labs, much of the focus has shifted to other needs, such as improving energy consumption and efficiency.

Indeed, the national laboratories are under the auspices of the Department of Energy (DOE) and, as a result, energy initiatives have a strong emphasis.

While we are big fans of private markets, there are some scientific projects that are beyond the realm of commercial entities. Specifically, private entities will not invest in projects that:

  • Cost incredible amounts of money. Even a wealthy company like IBM or Microsoft cannot afford to invest in some of the projects that the national labs pursue.
  • Have no short term commercial application. Companies typically will only invest in R&D projects that have a short-term commercial goal designed to generate revenues.
  • Require decades of research time. With CEOs in and out on a frequent basis and the need to respond to the whims of shareholders, few companies have the staying power to take on long-term research projects.
  • Are high-risk. High-risk R&D means there is a strong probability that there will be a no-return or low-return outcome from any given project. This variability is not something that most companies embrace; instead, they prefer to only focus on projects that are likely to be successful.

Because commercial organizations avoid long-term, high-risk, costly R&D projects, the national labs fill a vast void in the marketplace. They do not have to focus on generating quick, profitable results and can undertake projects that would otherwise never be addressed.

The support for research and development that is given to the national laboratories represents a pooling of investments from all citizens to fund R&D. It is in many ways similar to the risk pooling that occurs in the insurance industry. Individually, I cannot easily absorb a house fire but pooling together with many other families to buy fire insurance, we can effectively and collectively protect our homes against disaster.

In economic terms, disaster occurs when a country fails to innovate and loses control of vital industries to other nations. An oft-cited example of this is the benefits that we have accrued in the United States as a result of our having built the Internet here as a result of government-funded research. By inventing and controlling that key technology, the United States has benefited immensely.

So, the next time you are at a cocktail party and meet somebody who works at one of the national labs whether it's Argonne, Ames, Los Alamos, Oak Ridge or any of the others bow down to them and thank them for their contribution.

We desperately need those national labs to fund innovation and bridge the gap between new knowledge and its being put into application by industry.

Having said that, we can't give the national labs a free ride. They need to be held accountable and be closely scrutinized. Government organizations can easily become bureaucratic and lose their passion and their focus on their mission.

If you live near a national lab, pay them a visit and ask them whether they are spending your tax dollars intelligently and moving forward on interesting projects.

If nobody asks, the labs may think that nobody cares and that's when the ogres of mediocrity will take over.

On a final note, as an entrepreneur you will do well to cultivate relationships with the national labs. Every lab has a person or group dedicated to commercializing national lab research.

There are quite a few diamonds in the rough untapped technologies with enormous potential buried within the national labs. Do a little digging and you may find your fortune.

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