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Smart America Challenge Workshop
White House Campus, Eisenhower Executive Office Building
Dec. 12, 2013
Dr. Patrick Gallagher, Acting Deputy Secretary, U.S. Department of Commerce and NIST Director

My primary job today is to not take out any of the energy that you’ve been building all morning, because what you are about to do in this team setting is actually the heart and soul of today.

What I thought I could do is let you digest a little bit because I know you were working through your whole lunch and I’d like to just sprinkle a few thoughts and kind of touch on at least for me what is kind of foremost in my mind when I thought about why would all of these folks, from all of these innovative companies, come together, go to the White House of all places, get stuck in a small conference room, drink bad coffee and food by the boxes, and then spend all this time trying to form teams.

What’s in it for everyone? What’s at stake here? And of course my reflections on that question kind of led to a few observations. 

I was actually in the White House as a staff member in the Clinton Administration. And there are a few alumni that are back with us. Tom Kalil at that time was at OSTP and, at that time, to take you back, this is pre-web.  

The Vice President was talking about the information super highway, remember that? This promise of this Internet, net thing, and we didn’t even know what we were calling it then. Many of you may remember the first ads on Super Bowl. They were putting urls up for web sites and it seemed kind of odd because there wasn’t any content on these sites yet. It was a very interesting time.

Of course the reality is to look at today. It has utterly transformed businesses, it has transformed the way the government works, it has transformed the way our society works. And it’s driving change around the world. I think even at that time the most imaginative people would not have captured the full potential of what’s happening. 

And that’s sort of the power of being at one of those disrupter moments. When something so new is coming in that it fundamentally reshapes the way people interact, the way things are thought of, the whole construct.  

And what’s most exciting to us here is that cyberphysical systems, really. I think in my view are the same disrupter, maybe bigger. 

After all we’re talking about taking the full power and potency of this information system and instead of making it static. We’re now attaching it to dynamic data and control. And who knows where that leads you because we’re adding sensors to where you might not have thought that was even possible. Wearable sensors, embedded in our infrastructure, embedded in our lives. Doing things at a scale that we haven’t imagined and probably can’t fully imagine today. 

And when I think back to that time in the Clinton Administration, when some of the evangelists like Tom were walking the halls telling us how important this was, one of the things that became clear is that for the power of a technology that potent to really take hold, there is a public acceptance that has to take place. It really is important to capture the imagination of the citizens and the public that are going to be involved in that. Because even if they are not the ones developing it, they are in the end are going to be using it and in some sense they have to help create the conditions that allows that to take hold. And a lot of what was happening back in the 1990s, about let’s step back from this innovation, a very deliberate decision to not intervene and design it. Let the private sector go. We made decisions about stepping back in both control and tax and all sorts of other issues that were probably very important to setting the right conditions for that wave of innovation and development that has been coming ever since.  

And I think those decisions would not have been made possible if it wasn’t for some of the early efforts to tell people how important this potentially could be even if we didn’t fully understand it and begin to make that case. 

So for me, personally, what I find most compelling about today, in this jam, what are we calling it? The Internet of things jam? We’re borrowing it from the data world where they do this data jam. What I find most compelling is to unleash a type of entrepreneurship that can very quickly put in front of people in a very real way a glimpse, it is not the full thing of what’s going to happen but it’s an actual glimpse of what this technology could be. 

The power, of course, is connecting things that maybe no one thought could be connected before. Making relationships across different types of things and using this liquidity of data that we have to combine and transform and create something that were basically unimagined and would transform the way we think about it. And even if it’s a small example. Even if it is a really specific example around a particular thing, my view is that it’s going to have a much bigger impact than just solving that one problem. Because in addition to that, it is basically enabling the public to begin to reimagine what this means and could mean to them. 

And maybe that in the end is why it was worth dragging you into Washington, D.C., to have a discussion like this and we could have imagined probably some environments more conducive to the entrepreneurial spirit than most people would associate with Washington, D.C.

But I think the deal that we can offer is (1) we want to support you in any way we can. We can be a host and we can provide a venue that we hope will jam you into a small room so you have to network and come up with some great ideas. We’ve done that. 

And maybe we can be a catalyst for some of the cross-sector and cross-industry collaboration that I think is most powerful.

And the other side of this, this is a challenge after all, we’re willing to use the full power of the Administration to put a spotlight on what you accomplish. So the challenge side of this is that if you come up with something really great and really compelling we want to stand on top of this building and tell the country about it. And we’re happy to do that and we think it is not only great for you, it’s a signature moment, but it also plays this important role in doing what you’re doing, you’re beginning to make that case in the public’s mind and imagination about why they should care about this and why this wave of innovation is so important.  

Because remember, 20 years ago when this started out on the Internet, it was a small group of specialists who were doing that. Most of the people that we talked to at the time didn’t think it was going to be that relevant to them. And now today you can’t imagine your life without connectivity. You can tell, we complain about it if it’s not there for a few minutes. Everything depends on it. 

And my guess is we’re looking at something at least as potent in this case. 

You know from the Commerce Department side this is borne out of sort of a macroeconomic scale. We’ve done studies where we’ve asked folks to look at the economic potential of cyberphysical technology. I also find this a little bit interesting because we don’t really have a crystal ball to say what it is yet. So what they’re doing is extrapolating from some premises, but those extrapolations are stunning just on their size.  

We’re talking about trillions of dollars more in value-added manufacturing and productivity and commercial activity in, frankly, relatively short time windows. You know 10 years. We’re getting into dotcom level injection of activity here. 

We’re talking about GDP improvement just from this area that could be 2 to 5 percent. That’s doubling our GDP rate of growth from what it currently is. So take any crystal ball with a grain of salt. It is based on assumptions. But these guys tend to be conservative. And I think that just points to the incredible potential that we’re dealing with. 

So I guess my charge to you is to make sure you drink your coffee. What we really hope is that some of the networking, some of the storming and norming that was happening in the morning exploring possibilities really now crystallizes, survives the afternoon slump in energy, and results in now a sort of a commitment to do something specific over, frankly, a relatively short period of time. 

We were talking about this the other day, and the software guys said we always set a 90 day target. This is cyberphysical, we’re going to do a little bit longer than that but it’s frankly not much longer. This is going to be about pulling together and leveraging and making connections rather than probably starting from whole cloth. 

And what we’re committed to do as I said is to be a platform where you can celebrate and we can showcase and help make that public case.

And then long-term we shouldn’t forget that as well. I firmly believe that the foundation of understanding and building we did to create this capability is going to be driven now by what comes out of it, so cyberphysical is going to shape our long-term priorities in terms of how we invest, or the shape of our R&D landscapes. 

It is going to reshape from the federal agency perspective how we think about carrying out our mission to the public. In the Commerce Department we already are. In terms of data we’re fundamentally rethinking our mission in a number of agencies and putting the data role first and designing the way we reach the public around that. 

So that’s just a small glimpse of what I think you can unleash in a whole set of mission areas. So we on the federal side have a responsibility to keep working with you, and I think the examples you provide to us are going to be catalysts for that transformation too. I’m sure that’s one of the reasons Todd was so jazzed when he walked in and saw some of the cool things that we have been working on here.

I can promise you next week he’s going to be calling me and saying we’ve got to get that thing happening over in transportation or what have you. This is very real to us.

Let me thank you for coming out here and being part of this. Let me also, before you get back to work, open the floor up and see if you have any comments. It could be straight questions or it could be, let me invite this, if you have a particular example from your own experience that sort of points to this promise of the Internet of things or the industrial Internet or this cyberphysical world we’re entering, I’d be interested in having you share those as well.